Good afternoon. My name is Marcello and I will be your conference operator today. At this time, I would like to welcome everyone to the World Fuel Services Corporation First Quarter Earnings Call. (Operator Instructions). I will now turn the call over to Mr. Frank Shea, Chief Risk and Administrative Officer. Mr. Shea, you may begin your conference.

Good evening, everyone, and welcome to the World Fuel Services first quarter conference call. I am Frank Shea, Executive Vice President and Chief Risk and Administrative Officer, and I will be doing the introductions on this evening's call. Today's call is also available via webcast. For the first time, we will have a live slide presentation along with our audio call. To access this webcast or future webcasts, please visit our website, www.wfscorp.com and click on the webcast icon. With us on the call today are Paul Stebbins, Chairman and Chief Executive Officer; Michael Kasbar, President and Chief Operating Officer; Ira Birns, Executive Vice President and Chief Financial Officer; and Paul Nobel, Senior Vice President and Chief Accounting Officer. By now, you should have all received a copy of our earnings release. If not, you can access our release on our website. Before we get started, I would like to review World Fuel's Safe Harbor statement. Any statements made or discussed today that do not constitute or are not historical facts, particularly comments regarding World Fuel's future plans and expected performance, are forward-looking statements that are based on assumptions that management believes are reasonable, but are subject to a range of uncertainties and risks that could cause World Fuel's actual results to materially differ from the forward-looking information. The summary of some of the risk factors that could cause results to materially differ from our projections can be found in our Form 10-K for the year-ended December 31, 2008 and other reports filed with the Securities and Exchange Commission. 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, Paul Stebbins.

Thank you, Frank. Good afternoon. We appreciate you joining us today. Today, we announced earnings of $25.8 million, or $0.87 per diluted share for the first quarter of fiscal 2009. Our earnings increased 64% over Q1 of 2008, reflecting the durability of our business model, our ability to adapt and respond to fast-changing market conditions, and achievement of a new level of organizational maturity and efficiency throughout the group. On a sequential basis, our earnings declined 10% from Q4, reflecting our cautious view of the global economy and its impact on our core industry sectors. Our primary objective in Q1 was to navigate a very conservative course on risk and return, until we could more clearly assess where the global economy was headed. This heightened sense of caution was a critical factor in our decisions regarding volume, margin, and risk. Given the continued uncertainty in the global market, we elected to enforce a stricter than usual discipline on all aspects of the business. While this resulted in shedding some additional volume, it also resulted in protecting our profitability and reducing exposure to bad debt expense. The fact that despite this, we were able to deliver solid earnings performance validates the success of our approach. We also drove cost control, delivered a 95% return on working capital, reduced our trade cycle to 5.1 days, achieved 15% return on equity, and increased our cash position to $386 million. When including our credit facilities, our liquidity position remains strong at approximately $950 million. We continue to evaluate additional strategic opportunities and expect to derive growth from acquisitions as well as organic development in our core space. In our marine segment, our team demonstrated tight discipline and execution, as we continued to service the needs of our customers in what was a deteriorating shipping…

Thank you, Paul, and good afternoon, everybody. Before I review our results, I'd like to mention that our first quarter revenues were impacted by a significant decline in oil prices, when compared to the fourth quarter and the first quarter of last year. For those of you participating by webcast, you will see our sequential and year-over-year decline in revenue tracks consistently with the sharp reduction in fuel prices on the next several slides. Consolidated revenue for the first quarter was $2 billion, down 31% sequentially and 55% compared to the first quarter of last year. Our marine segment revenues were $1.1 billion, down 28% sequentially and 55% year-over-year. The aviation segment generated revenues of $710 million, down 37% sequentially and 62% from last year's first quarter. Finally, the land segment generated revenues of $201 million, down 23% sequentially, but up 5% from last year's first quarter, principally driven by the acquisition of Texor last June. Our aviation segment sold 424 million gallons of fuel during the first quarter, down 6% sequentially and down 32% compared to the first quarter of last year. The year-over-year reduction in volume was principally due to our efforts to reduce exposure to low margin, higher risk accounts. While we did see a slight sequential decline in volume over last quarter, as Paul mentioned earlier, we do anticipate volume to begin to increase in the second quarter, principally driven by increases in lower margin commercial business, much of this on a secured basis. Our marine segment's volume for the first quarter was 5.4 million metric tons, down 18% sequentially and down 22% year-over-year. As we anticipated, softening market conditions, as well as our continued efforts to steer clear of low margin, high risk accounts, had an impact on volumes during the quarter. Despite a period…

(Operator Instructions). Our first question is from the line of Jon Chappell with JPMorgan. Please go ahead with your questions.

Paul, you said in the third quarter that the marine margins were probably unsustainable. Here, we are three quarters later and they have proven pretty sustainable so far. Is this still a function of the tight credit environment being the counterparty of choice for your suppliers? Is there something else going on? Should we expect margins to maybe weaken as the volumes come back? Just speak a little bit about the sustainability now that we've done this for almost nine months now.

I mean, I think as we indicated in both my own comments and Ira's, I think that to some extent we do see that the sophistication evolution of our business model as such is that something of a fundamental change in our value proposition and our position in the market and that's given us a level of procurement capability that I think is more fundamental and is reflective of kind of the new company and the maturity and the evolution of our business model. So I would say that to some extent, it is a fundamental change in the model. There are obviously a lot of factors, but credit, liquidity, the concerns about counterparty risk, are absolutely paramount in today's market. We are fortunate to be in a position where we can, if you will, step back and take a very conservative view and exercise some caution as we wait to see how things sorted out. I think that was very much our disposition in Q1. I would say the margins reflect on some level a fundamental change in the success of the model. We are very, very good at procurement strategy and it allows us to generate competitive pricing to our customers, but also achieve superior returns.

You had also mentioned in your comments this time around that some of your competitors might be getting a little bit more aggressive on margin. Are you essentially letting that business go with, I guess the views that when things kind of normalize a little bit and when volumes pick up on their own just because of a broader macro rebound, that your proposition will help you regain or maintain market share while being able to keep profitability through the trough of this market?

Exactly. I think we're absolutely going to be in position to maintain both market share and profitability. What we've seen in the competitive landscape, and it's something that is more significant in today's credit-conscious economic meltdown scenario is that these companies that have a lot of debt are in a position where they have obviously got to service that debt. So there is going to be a push to generate revenues to kind of keep the business model going. That does introduce a level of market grab, volume grab, some pressure on margins. We're just not going to get baited into the game. We don't think that that makes any sense. So I don't think that that is a long-term, success model, or model for success. I would say that for our point of view, we have to sort of not fall into that trap. We've got to stay true to our business model. We've got to stay true to our value proposition. I think it's about exercising discipline and maintaining focus and I think we're in a pretty good position to do that. So in some ways, I mean there will always be competition, but our view is that this market very much favors us and our model. We're in a very good position and it's just about not falling into that trap of sort of chasing random market share. We don't think that's a good thing. There's certainly in this market, we've seen some examples of some pretty spectacular problems among our competitive landscape. We're just not going to follow that path.

Okay. That makes sense. One on the cost side, I just want to see if there's any way to kind of flush out the lower costs, especially as a percentage of gross profit. Is this a function of the ERP system finally driving some significant efficiencies and then seeing the top line flow directly to the bottom line? Or have you been a little bit stricter on cost control, maybe especially as reflected in compensation, just to keep the overall margin strong in what's a weakening volume environment?

Hey, Jonathan, it's Ira. Thanks for the question. So we certainly have begun to gain some efficiencies from the ERP platform. So the answer to the first part of your question is yes. I'm sure there's a lot more that we could accomplish there, but we're seeing benefits now that we're over a year into the new ERP environment. But we also have been more focused on controlling costs and that effort did result in some benefits in the first quarter, whether it be T&E, telecom expense. There are a lot of different categories that we've been focused on and have been able to do a better job at managing those costs on a day-to-day, week-to-week, month-to-month basis, and it benefited us in the first quarter.

Okay. And then just one last thing, I hate to ask something that I think you said, but I can only write so fast. Did you say what the self-supply impact was, negative or positive in the first quarter?

On the self-supply, I said, yes, we saw an insignificant negative impact in the first quarter, because pricing didn't move a whole lot. It was down a few percentage points, so it didn't have material impact one way or the other.

Okay. But did you say that your inventory position could potentially increase in the second quarter since it's not really taxing on your working capital, is that correct?

That is correct.

Our next question is from the line of Alex Brand with Stephens. Please go ahead with your question.

I guess notwithstanding the fact that we know it's bad out there, help us understand if there were any sort of changes in the quarter, whether as things got worse and maybe that bleeds over now into the second quarter? And if you have any specific thoughts, this is a very broad question, but I am wondering about aviation as well? It sounds like you're going to sort of shift strategy there a little bit. Does that reflect that you have specific weakness in parts of the aviation market that you need to maybe avoid those parts of the market for the time being?

Yeah. Alex, I think the way to answer that is, look, I think with a company like ours, sort of the test of our character in this market is the agility and the speed with which we can respond to changes. So there's a massive macro dynamic going on now that we're trying to both understand, respond to, and continue to reinvent and refine our value proposition to be responsive to those changes. I would say that the first order of business as good stewards of the franchise is to be cautious. We have to step back. We have to dial back our exposures. We have to kind of get back to some sort of bedrock and make sure that the franchise is safe, secure, and that we're not going to get blind sided by some unfold event that we do not anticipate. That's the first responsibility of management. Once we've taken stock of that, we look at the landscape and as we look forward, we're trying to understand what will the dynamics of the economy mean. All airline traffic is not going to stop, despite the fact there's been drop in traffic, that there's been some drop in revenues year-over-year, that certainly we understand that it's an industry that's been stressed. We decided that the way for us to reshape our tactics, given the value and the strength of our balance sheet, what a great opportunity to reinvest into the business and do it on a more secured pre-pay basis, so it might reduce our margin as bit, but the focus now becomes profitability on a secured basis. The power of our buying allows us to actually deliver that value to the customers and we now kind of tweak the model yet again to be responsive to the change. One other thing that's interesting to note is that when you do get the reductions in passenger traffic, remember, every single passenger traffic is also carrying cargo. So in some ways, this is going to create a secondary impact, where the cargo market is going to actually pick up a little bit and get a better opportunity because they are not competing with the passenger traffic planes that were carrying belly cargo. So this is a constantly evolving, changing scenario where one bad downturn has an offsetting possible corrective turn. I think our view is that as we look forward, we definitely see that we're going to have the opportunity to generate more aviation commercial volume. It may be at lower margins, but it's certainly profitable and it's going to be on a more secured and less risky basis.

Okay. Can you just comment on the trends you saw throughout the quarter?

I would say that the trend in the quarter is what we talked about. You saw the result of that.

Well, I mean, I'll be more specific. In some cases I've got air freight contacts saying, look, it seems like it sort of bottomed. It hasn't gotten worse. It did get worse during the quarter, but it seemed to stabilize in March and seems kind of stably bad now.

I'd say that's probably a good way to put it. We're stably bad. Look, if you talk to anybody in aviation in the industry, this has been a hell of a wallop to the head. You've got a global economy that's in full scale retreat and it's been difficult and they have all. I think the better practitioners are readjusting and slashing capacity and restructuring themselves to be responsive. Again, all traffic is not going to stop. It isn't all going to go away. So, our responsibility is to look at all that landscape and take a very realistic clear-eyed, unromanticized view of what those realities are and try to tweak our business model so we can respond to those customers and help them out. I think we've done a very, very good job of doing that. I'd tell you the aviation team did an absolutely first-class job of re-shifting this model, taking our very strong cash position, beginning to (inaudible) reinvestment in our inventory position, so that we can use our self-supply to create value for some of these contract customers. I couldn't be more delighted with what they have done under the circumstances and the fact that we delivered the performance we did given the backdrop, I think it's phenomenal. So I feel very good about where we're going directionally and I think that the rest of the year looks promising and that we may have hit the bottom. I don't absolutely know that, but certainly our sense is somewhat like your own. In marine, we did again a very good job. You know what's happening in the shipping industry, but I think our discipline and focus on our best-in-class customer base has been the right strategy for the last couple of years. It's a very high value add. We feel that we held on to market share more than the overall demand destruction given the decline in the shipping markets. So, we're ahead of the game from our perspective and very well positioned going forward. So, again, tight execution. A lot of focus. Continued deliverance of real value in a difficult market and being able to help those customers weather the storm and be their partner through this I think is a very good thing and puts us in a great position going forward and the same thing for our suppliers. So I would say overall, this was a quarter that was all about discipline and positioning for the rest of the year. We feel pretty good about the rest of the year.

Thanks for that color, Paul. And just sort of one more point of clarification. I'm guessing you guys didn't try to calculate this, but when I look at marine down 22% and aviation down, I think it was 32%. Is it fair to say that almost all of that is the customers doing less business or is you are taking risk out of the model a bigger part of that than I realize?

Yes, that's exactly what it's about, Alex.

So it's mostly just the customers and only marginally you guys taking risk out?

No, it's the opposite. We made a calculated decision. We made a choice to be very selective, given, look, as you think about where we are in the history, there's a lot that's happened and how fast it's all changed. So you go back to January 1 and you try to understand what this landscape is going to look like and what had is going to happen in the economy, in the new administration, the bank crisis, lots of things going on. The most prudent thing that we can do is management of this franchise, is to take a step back, take a very conservative, cautious view. As I said in my opening remarks, we took a stricter than usual discipline was imposed throughout the entire organization, because the better part of valor is to live to fight another day. Now, because we don't have that perfect visibility on what was going to happen throughout the quarter or even into the balance of the year or how the banking crisis might get resolved or how the liquidity markets might open up, or what was going to happen in trade or what was going to happen in growth in China, these were all things that were announced. So, what's the most important thing we can do? Dial back, take a very rigorous approach, maybe even too conservative approach, but that is the responsible thing to do. So we made calculated decisions to really dial back, reduce it to a bedrock and take a cautious view. I would say we executed that strategy superbly. Now it's a question of as we look forward, I think it's going to be up to us to choose and sort of open up the gates going forward, based on how we feel about trends and I think we've already begun to see this in the aviation space and I think we're going to see it in marine as well.

I appreciate your time, Paul. I thought it was a nice quarter and you guys did a great job. I appreciate it. Thanks a lot.

Our next question is from the line of Steve Ferazani with Sidoti & Company. Please go ahead with your questions. Steve Ferazani - Sidoti & Company: Good evening. I just want to follow up I guess on the last few comments. On the marine side, risk level probably even at a peak immediately in Q1 impacting volume. Have you already seen that lessened by the end of the quarter? How cautious are you moving forward in the next couple of quarters?

I think that our disposition, Steve, right now is more competent than it was in the beginning. Again, it's not that we have any divine insight into what the world economy's going to be. But if you go back to the beginning of Q1, the most important responsibility we have as management is to protect the franchise at all costs, right? That's the discipline that this company is all about. So we aren't sure where it's all going to go. We said, okay, let's take the conservative view and if we happen to be a little over conservative, well, okay, so be it. That's a better position to be in than to bet the farm and regret it. As we get out of Q1 and we start going to Q2, I would say, yes, it's an accurate statement that we feel more confident about the landscape, we get a better sense of our customers and their ability to navigate and weather the storm. It helps us tremendously that our strategy over the last couple of years has been to focus at the best-in-class. So these are the better capitalized companies that have done very well over the last several years. They are certainly in a position to financially weather this storm, and, yes, they may be suffering from some of the downturn in trade and some of the volumetric, shift in cargo activity, but it isn't going to kill these companies. They are going to make it through. So it's our responsibility to be their partner and help them navigate that. So I would say now our disposition's more confident and I think that I'm glad we went through the exercise we did in Q1. It was the right thing to do. Steve Ferazani - Sidoti & Company: On bad debt expense, obviously another segment, the shipping side, under greater weakness, was that you learned from the aviation that allowed you to be more conservative that we didn't see a rise in bad debt expense?

That's a good question. I don't think it's so much, we have certainly learned something from the aviation space, but I would say that wasn't the primary focus. As you know, historically, these are very different models. I would say, what was going on in shipping that was of particular concern as you had a huge amount of upheaval going on in the dry bulk markets, charter markets, the container activity was weakening. So the question was, what was the class of customer that you were focused on? I would say that, again, it's been the discipline of this company in the last couple of years to stay away from sort of middle, lower tier players in the space because we don't feel that long term that they respect the value add that we deliver and that it's really the best investment of our capital. So if we are going to make the investments in a very high level of service offering to these global fleet, let's focus on the best of class. I would say that what we learned was that some of the competitive landscape out there, certainly had some trouble out there with some of the middle and lower tier. That's not a space we're trading in. So I think we largely bypassed all of that and it was really this question of being a little more selective as we looked at risks, but I'll go back to the original statement. I think we feel more confident now that Q1 was the right thing to and do and we look at the landscape going forward and I think we feel pretty good that all of that discipline's paid off.

Our next question is from the line of Mickey Schleien with Ladenburg. Please go ahead with your question.

Good evening, Mickey. Couple of questions. One is with respect to volatility of your prices. We all know that generally the more the better for you. Given what we've seen so far this year, I was wondering what your expectations are for volatility and fuel prices for the balance of the year, not necessarily the direction but the volatility?

Now, I understand. Again, if I had that crystal ball, perhaps we would all be calling you from a hotel in Bermuda where we would be enjoying a very nice life. Getting visibility on what is really going to happen in the oil market is a little tricky. But I would say directionally, it's an upward bias in trend. You've seen it in the last short near-term period. I think that any sort of a turn in the economy is going to trigger a rebound in oil prices. I think one thing you can be sure of is that there's going to be a little bit of confusion and noise in the oil markets over the next several months as the economy tries to sort itself out, as the stock market tries to sort itself out. There's going to be some volatility. Whether that volatility is materially different from what we saw in Q1, again, the primary bias in Q1 was a drop in prices and it wasn't a heck of a lot of volatility, but I would say it is an upward bias. I think that there will be some volatility throughout the year, how the level compares in absolute terms is very difficult to give you with any precision.

My next question is related to the two acquisitions. You did put out the accretion that you're expecting, but I was curious what sort of assumptions you've made in terms of redundancies or synergies of those two businesses with your existing platform when you calculated the accretion?

Well, they are both different. Starting with TGS, that was really a traditional bolt-on where we were able to add the additional volume customer base from TGS to our existing Texor model. So there was significant synergies there, very little cost came across with that additional business. Henty, while there are strategic synergies, it's not the same bolt-on variety, so there are a lot of opportunities for us to benefit from the expertise they have in the markets they serve, which should provide us with benefits going forward, but not, not the same type level of cost synergies that we saw in TGS.

My last question is regarding share repurchases. I had thought that given the authorization the board gave you and where the share price was, we might have seen you repurchase some stock. Could you give us your thoughts on where you stand in terms of share repurchases?

Good question as well. We've had something that we discussed with our board on a regular basis and make determinations of what price points we think make sense for us in terms of buying back our own shares versus making other types of strategic investments. To-date, you know, fortunately where we are today, we're honestly nowhere near that level, as if we had the unfortunate circumstance of our stock dropping down significantly from where we are today, that's something that we would reevaluate. So, I guess, that's the best answer I can give you on that one right now, Mickey.

Our next question is from the line of Edward Hemmelgarn with Shaker Investments. Please go ahead with your questions.

Two questions. One, Paul, are you making any progress or and working with your customers to develop more sustainable hedging programs for them in both the marine and aviation segments?

Yes, it's a very good question. There's no doubt that the use of derivative instruments to help manage exposure to volatile oil prices in any kind of market, be it up or down, is a pretty integral part of strategic procurement today. I would say by and large, all of the advance companies are at least looking at this, if not actively doing it. Sometimes it varies a little bit depending on what the balance sheet opportunity is or what the financial position of the company might be and what their sort of caution or disposition might be. As you might imagine, prices are low right now. It's our sense that over the next couple of quarters, we're going to see a renewed interest in wanting to take advantage of the ability to lock in some of these historically low prices. I think that most of the senior management of the large groups believe that as the economy turns and trade begins to increase, logically you're going to see a return to somewhat higher oil prices. They may not go back to 147 oil that we saw in 2008, but they are going to I think the upward bias, as we said, is there. So I think the thing that we're probably going to see is more activity in this space. It's been kind of quiet over this current period because everybody was trying to find their way. The same way that we took a dial back and we're cautious in Q1, just to sort of take a let's wait and see. I think a lot of the client base that we were consulting with at a very high level on the financial side were also saying, look, let's just sort of wait and see where all of this is going. Now that we've kind of weathered that, I think it is a good time. I think that we're going to be certainly encouraging strategically all of our large customers to be taking a hard look at that. There's certainly opportunities and I think it's the responsible thing to do in terms of managing exposure in the long-term.

How does that factor into revenue and earnings for World Fuel, for example?

Sure. I would say that when we have active patches of investment in using derivative instruments to help manage the forward curve, it tends to enhance our ability to work both profitability on the margin side as well as its volume, that's in addition to the traditional physical, so it tends to be a positive. So I think that in Q2 there was pretty much an absolute absence of that activity, not 1000%, but pretty darn close to none. Everybody was just waiting. So I think that I think that as we look forward, though, I think it would be a positive thing to see more activity in that space.

Okay. Lastly, Ira, I know that you mentioned I think in the last call or something that you had a strong desire to be very risk-free in the cash investments, but it does appear if the, you know, liquidity situation is getting to be better and when might we expect to see a return, if any, on the large cash position that you've got? I mean it's kind of puzzling that you've got net cash position and yet you end up with an interest expense each quarter.

Sure. Well, probably a great question to ask just about any Fortune 500 corporate treasurer in America today. I think everyone has a similar view, although there are probably still some people out there that may tend to be aggressive, despite lessons learned over the past 12 to 15 months. We've chosen in this period of market instability on the banking side, although it seems that that's beginning to improve, to be very conservative and in this market environment, even the aggressive windup with maybe 1 percentage point more in return. The question is, is that 1 percentage point worth risking what's a significant chunk of your assets on your balance sheet. So it's something we evaluate on a regular basis. As market conditions improve, we may find ways to be a bit more aggressive without taking on significant risk and of course we would want to do that, but for now, we're remaining conservative in terms of the types of investments we're making, the banks we're placing our cash with, etcetera. But that could change over time. So, respect your point, but we have taken both the high road and the conservative view just because of all the volatility and uncertainty out there in the market today.

Ed, just a follow-up on the hedging. To be clear, we certainly used the derivative instruments to manage our own inventory and pipeline movements, as you know, so you'll see activity in that perspective. But to be clear, in terms of marketing into the customer base, that's something that we want to have them use to protect their position going forward. That went quiet in the quarter, but we expect some activity going forward.

I guess that's what I'm just interested in. Now that prices are low, you would think that it would be a good time to start the forward hedging program as opposed to when prices are high.

We absolutely agree. I think, again, the psychology of the market was sort of stunned and cautious. Everybody's kind of reeling in this market. So Q1, just in the same way we were kind of taking a breather to just see where everything was going, I think a lot of the customer base is doing the same thing. But you're absolutely right, when prices are historically low, that is an opportune time and it is part of any good strategic procurement program.

I would think that this would help you to enhance your value proposition to these and customers.

We have tremendous expertise in this space. We were one of the pioneers of using derivative instruments in this space. We've got the balance sheet and the relationship with the writers that is very, very strong. So in the same way that we've become an aggregator of a preferred nation status, sort of most favored nation status. For the physical suppliers, we are also very much enjoy that status from the counterparty side, from the writers. As you can imagine in the last year with all the focus on counterparty risk, the strength of our balance sheet, our deep expertise in derivative instruments makes us a very reliable counter party. The customers are looking to us more than they ever have to actually provide that role because we're a tremendous source of liquidity for them to use those instruments to manage their forward curve. So we enjoy I would say sort of a unique position in that regard and it does bode well for our ability to make that part of our value going forward.

Okay, thanks. Congratulations on another good quarter.

There are no further questions at this time. Gentlemen, do you have any final remarks you would like to make?

We appreciate your support. This was obviously a challenging quarter, not just for World Fuel, but for the world. I think we executed very well and I think we feel pretty confident about the balance of the year and we appreciate your continued support and look forward to talking to you at the end of Q2. Thank you.