At this time, I’d like to welcome everyone to the World Fuel Services 2012 Second Quarter Earnings Call. My name is Jamison, I’ll be your event specialist today. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session, instructions on how to ask a question will be given at the beginning of the Q&A session. It is now my pleasure to turn the webcast over to Mr. Jason Bewley, Vice President of Corporate Finance. Mr. Bewley, you may begin your conference.

Thank you. Good evening, everyone, and welcome to the World Fuel Services second quarter 2012 conference call. My name is Jason Bewley, I’m the Vice President, Corporate Finance and I’ll be doing the introductions on this evening’s call alongside I’ll have slide presentation. This call is also available via webcast. To access this webcast or future webcasts, please visit our website www.wfscorp.com and click on the website icon. With me on the call today are Michael Kasbar, our President and Chief Executive Officer; and Ira Burns, Executive Vice President and Chief Financial Officer. By now you should have all received a copy of our earnings release. If not, you can access the release on our website. Before we get started, I’d 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 differ materially from the forward-looking information. A summary of some of the risk factors that could cause results to materially differ from our projections can be found in the Form 10-K for the year-ended December 31, 2011 and other reports filed with the Securities and Exchange Commission. We’ll begin with several minutes a prepared remarks, which will then be followed by a question-and-answer period. At this time, I would like to introduce our President and Chief Executive Officer, Michael Kasbar.

Thank you, Jason, and good afternoon, everyone. Today we announced second quarter net income of $48.6 million or $0.68 per diluted share. We are pleased with these results, as they clearly demonstrate the resiliency of our multi-faceted business model. Our global fuel has performed well in the quarter, delivering volume growth across all three of our business segments year-over-year and posting solid volume growth sequentially in our Aviation and Land segments. While there is continued and significant volatility, uncertainty and generally sluggish demand in the global marketplaces, we remain committed and optimistic on our ability to deliver on our long-term growth strategy. Our Marine segment performed well, given macroeconomic conditions in overall industry weakness. The quality of our portfolio remains strong and our Marine team remains focused on profitable growth going forward. We believe we are well positioned to capitalize on improvements in the market and we continue to be seemed and leverage as a strong and reliable counterparty with a full suite of services to help our clients and suppliers go to market. Our Land segment posted strong results across-the-board, driven by organic growth from our core branded and unbranded distribution businesses, our wholesale and rail business, as well as exceptionally strong performance in our crude oil marketing joint venture. Our fuel logistics and marketing business is an excellent example of how we have capitalized on adjacencies coming from our core reselling activities. The organic growth we have seen in this segment is a testament to our entrepreneurial spirit of our dedicated team. Overall, we are pleased with the progress we have made in our Land segment, as we look to continue to invest in both organic and strategic investment initiatives. At our Aviation segment our core reselling business posted strong volume and we saw a fueling activity picked up in Afghanistan after securing alternate northern routes rigs into the country. The core aviation business activity remains solid and our diversified offerings in our general aviation business continue to grow the foundations of our business remains profitable and we continue to believe in our strategy and long-term growth plans. We have a community of global professionals dedicated to growing our business on a daily basis. Our core competencies of risk management, local logistics and global reach combined with a solid balance sheet remains a key differentiator for us in these tumultuous markets. We continue to evaluate acquisition by client, who will continue to look for and execute on organic growth opportunities. We thank you for your continued support. And I’d now like to turn the call over to Iris for a financial review.

Thank you Mike and good evening everybody. Starting with revenue consolidated revenue for the second quarter was $9.6 billion, up 2% sequentially and up 11% compared to the second quarter of last year. The year-over-year change in revenue was impact by that 10% increase in volume across our businesses. Offset by the decrease in crude oil prices, which declined to an average of $93 per barrel in the second quarter, compared to $101 above last quarter and $102 in the second quarter of last year. Our Marine segment revenues were $3.8 billion, down $137 million or 4% sequentially, but up $234 million or 7% year-over-year. Approximately 84% of the year-over-year increase was a result of higher average fuel prices during the quarter and the remaining was a result of increased volume. Our Aviation segment generated revenues were $3.5 billion, up $136 million or 4% sequentially and up $183 million or 5% year-over-year. The entire year-over-year increase was a result of increased volume, which was partially offset by lower average fuel prices. And finally, the Land segment generated revenues of $2.3 billion, that’s up $140 million or 7% sequentially and up $493 million or 27% year-over-year. The entire year-over-year increase was due to the increase in volume, which was also partially offset by lower average fuel prices. Volume at our Marine segment for the second quarter was 6.4 million metric tons, that’s flat compared to last quarter, but up 1% compared to the second quarter of last year. Fuel re-selling activities constituted approximately 89% of total marine business activity in the quarter, in line with last quarter. Our Aviation segment, so just over 1.06 billion gallons of fuel during the second quarter, that’s up 69 million gallons or 7% sequentially and up 104 million gallons or a 11% year-over-year. And finally,…

(Operator Instructions)

Operator, do we have any questions in the question queue?

One moment, Jason. We do have one question from (inaudible).

Thank you. Good afternoon, guys.

Hi, Jon. How are you?

Good. So just to start off with a numbers question for Ira. I didn’t think I caught it, but did you mention the impact of the self supply business in the second quarter? I know it’s kind of been all over the math of last few quarters and want to see if it is positive or negative impact on 2Q?

Good question, Jonathan as well. I did mention that there was a negative impact and it was actually, remember, there was a 20% drop in jet fuel prices from peak to trough during the quarter, which is pretty significant. So overall, we recognized a negative impact of somewhere between $6 million and $7 million in the quarter.

Okay. All right, that’s good to know. And then Ira, also this is either for you or for Mike, but you said in your closing comments about your – the counterparty of choice and when I was reading your commentary in the press release about your balance sheet, you got me thinking back to late 2008 when the credit environment kind of tightened up. I know we’re nowhere close to the credit environment of late 2008, however, I know the banks are also being far more strict with their lending right now. So how the competitive landscape of your business changed in the last 6 to 12 months, as far as know credits concerned, as far as World Fuel’s competitive advantage with your balance sheet (inaudible) transparent financials?

Yeah, Jonathan, it’s a great question. We definitely noticing bit of that, I think that the number of lenders is definitely decreased to the marketplace. We’re seeing that we’re getting approached more regularly by a number of different participants in the marketplace for our financial capabilities. So it’s certainly something that differentiates us from the competition. So it’s continuing strong part of our value proposition in the marketplace. So whether it’s for our ship owner clients, our supplier clients, who may need some financing, they’ll look to us for flexible payment terms, whether it’s paying early or whether it’s extending terms. So we’ve got the ability to do that and work with them from merchant banking perspective. So we’ve been doing that for a long time. We’re certainly doing a little bit for that these days, we understand who the strong players are in the marketplace, what their business models are like, some of them have difficulty getting, community bank or a local bank to understand their business models. We’ve got the ability to construct in different ways to protect ourselves through a variety of different meanings. So it’s certainly a bigger part of what we do on an everyday basis and we’ve got the teams that individuals who know how to construct those types of transactions.

Okay. And from me one follow-up then just a follow up on that point. I’ve seen that you’ve been using some of the variety of ways to chase some counterparties as we’ve spoken about in the past, the shipping business is incredibly difficult right now. When you think about your risk that you’re willing to lay out in that business and then you lay that on top of some kind of ships going on in our logistics business, especially with the new fuel restrictions. Are you scaling back at all to be more conservative kind of your risk management policies or do you view this is kind of an opportunity where you do have the financial wherewithal to take on a little bit more risk and it’s an opportunity for you to garner more business and in cyclical industry that’s down right now, but hopefully, at some point, will come?

It’s really picking your places. We will walk away from a lot of business. Some business that and some of our counterparties and some of our ship owners that we understand their business models, we may go more deeper than some other folks. So it really just depends on the location, the jurisdiction, who the customer is, what dollar amount we’re talking about possibly what the returns are, risk adjusted returns. But we’re pretty engaged in the marketplace, I can’t say that what we do is any different than what we’ve always done. We’re certainly spending a lot more time physically in our client’s offices in those markets our folks are traveling around heck of a lot more. So it’s certainly a point of differentiation, it’s certainly a point of business development, not only on our ship owner clients, but on our suppliers, also within the aviation side, on our distributors and land and aviation, within general aviation and commercial aviation. So you can call it almost the line of business and an area of expertise that we have with our financial and credit and risk teams. So it’s certainly something that we utilize regularly and it’s become really a normal course of business for us.

Great. Thanks, Mike. Thanks, Ira.

Thank you, Jon.

We have another question from Jack Atkins.

Good afternoon, guys. Thanks for taking my question.

Hey, Jack.

I guess first off if we can just go back to the self supply business for a moment. Could you just maybe talk about, has the negative impact corrected itself so far in the third quarter or would you expect there to be a drag this quarter as well?

Sorry, Jack. We’re hearing some background noise, (inaudible)?

Yeah, sure, guys. I was just curious on the self supply side, just kind of go back to that for a minute. Could we talk about sort of the impact that’s having in the third quarter, have you seen the negative sort of issues correct themselves so far through July and into early August?

It’s tough to say, there certainly hasn’t been additional negative impact, there hasn’t been a much of a move in either direction in that regard, I would say for the month of July, slightly positive.

Okay, okay. But still sort of negative on a year-over-year basis it sounds like, Ira?

Yeah. I mean, effectively yes, because one month is not going to change the year-over-year analysis, so that’s where you’re getting at.

Okay, got you. And then when we think about the Aviation business overall, I know that the southern route as you mentioned has been reopened on the Afghan-Pakistan border and that’s going to help with your sourcing. So should that help improve the spread there in the Aviation business going forward now or should we expect I guess the level we’ve seen in the last couple of quarters shouldn’t be the run rate going forward?

I think, it’s alluded to on the call. Certainly, that the flexibility gives us some opportunities, probably more on the balance sheet side rest of them are on the P&L side, in terms of managing the relationships as effectively as we can in that region, but there’s a lot of uncertainty that still remains over there might they want to elaborate on that. So I think as I mentioned earlier, our expectations at least in the near term base what we know today is that performance to be similar to slightly down in the third quarter as compared to the second quarter.

I think, the only thing that (inaudible), it does give us flexibility as I said previously, we did open up those northern roots and those relationships. It used to be that we leveraged our commercial supply into our military now we’re doing, we’re leveraging our military activity into our commercial. So certainly make use of that new supply capability on the northern distribution network, but that the result I think are as higher indicated.

Okay. Okay, great. And then last thing from me, if you just touch on the M&A for a moment, I mean, it’s been little over a year since your last interactions as what you’re seeing on the M&A front. Is it a function of enhancing the deals sort of out there in the pipeline or is it a matter of the prices agreeable to you guys. I’m just kind of curious on your thoughts (inaudible)?

Yeah, well, I mean, I’m sure you’ll observe that we’ve been active with our smaller strategic activity in the quarter, all of that was in the aviation side. Those words pick-up say we’re non-material, so we didn’t really announce those, but I think that the market profile is definitely appealing to us in various businesses. So I think you’ll be hearing something from us, both of which (inaudible).

Okay. Great. Thank you guys.

Our next question it’s from (inaudible).

Good afternoon. I would say like you mentioned during your run through couple things are going down or should we expect to maybe see down in the third quarter as key mentioned through Marine, Aviation and Land each of the three segments. Is that economic that you’re looking at it coming in, is it losing market share to others. I saw that pilot is buying a fuel supplier max and whether a competitor of yours or companies like that taking share may be you can just kind of run through a little bit there?

Well, I’ll tell you what, I’ll repeat what I said and then Mike will elaborate more broadly. But I don’t think I said anything about marine, I think my comments relate to both Aviation and Land. In Aviation’s case it was the government piece that I said, we expect it to be flat to slightly down as we just repeated in the last question. Aside from that, there were no “negative comments” on the Aviation side. On the Land side in terms of crude, we just had exceptional performance in the second quarter, which changed a bit as we’ve gone into the last month of the quarter and the first month of this quarter is more similar to June than it was in April and May. So based upon what we know today, the expectations are that will be very difficult to repeat that crude joint venture performance in Land. Aside from that, there are a lot of opportunities for Land and the core land business did perform quite well in the second quarter and those teams are continuing to focus on strategic opportunities to grow that business. So those are really the two relevant comments that I made during my opening remarks.

Yeah, Ken, I’d just add to that. As you all know and we bench numerous times the size of that, land market is significant and there are a number of different spaces. And so we have a sizable position in the branded and unbranded dealer distribution business, distributing gasoline and diesel to gas stations, primarily in the Midwest. We like that business, it’s stable, it throws off a nice return, and then we complement that with a wholesale business or rail business or a crude business, supplying to end users, lubricants, a variety of different activities. So it’s a mix, we like having the mix, we like having a multi-faceted approach we think that that that is supportive of good offering in the marketplace, and in terms of giving predictable results. So it’s a space we feel good about, we had some good organic growth and we’ll continue to invest in that space.

Just to understand that. I mean, if the land I guess gets thrown off by the variability of this joint venture, would you want to just break out the joint venture, or do you have to consolidate into land? I’m thinking of just why not put the kind of the summon in that non-controlling interest or just your income?

Well, the gap doesn’t – that’s the only way you do it that way in terms of putting in the non-controlling interest. But because of the fact of the minority interest is reflected on a separate line and I would say, 98% of that line relates to the two domestic land joint ventures, it makes it pretty easy to sort out on the P&L as presented today.

Okay. Can you just dig into that $29 million of acquisition, you mentioned three in aviation were they at the end of the quarter, early in the quarter were they domestic based international. Can you give us a little insight into what you’ve been kind of acquiring into?

Well, they’ve rolled in the quarter. They will spread throughout the quarter, there weren’t necessarily, these are relatively small, local distribution businesses one was in the Caribbean and the other was in Africa and the third one was a software business. So they’re all within our space, all within our core area, very confident individuals that Phil Sparks in strategic areas. So these were great pick-ups and we’re looking to sort of create good amount of efficiency in terms of bringing those companies quickly into the fold. I think one of the things is we’re building more of a broad-based deal mentality in our organization. So we feel good about that. These are transactions that are being handled on a regional basis. So it’s still a pretty fragmented market, so while – they’re not necessarily going to move the needle, we think that it makes sense to continue to go down that road, while we look at bringing on more substantial size businesses into the fold.

I appreciate that.

Thanks.

Our next question it’s from Kevin Sterling.

Thank you operator. Good evening.

Hey, Kevin.

I almost have the big picture question because you’ve alluded to that resolve oil prices kind of move from recent gesture with big trough about 20%, we saw big decline in the quarter. And as oil prices fell through the quarter, did you see your customers’ behavior change in any of your verticals for instance maybe in Marine side as Bakken fuel prices fell later in the quarter just see customers buying larger stems or you’re seeing how customer behavior changes throughout the quarter?

No, it’s well, yeah, it’s in fact as the market, started to drop off. You know that we’ve got a level of sophistication on the derivative side in terms of risk management and as the backwardation falls off our activity in terms of selling those contracts, tails growth as well. So that certainly had an impact within the quarter. Our ability to sell those contracts and bring that volume into the quarter was definitely compromised, that’s the way it goes. And I think the nature and the position of owners now is – and operators is a little bit of a wait-and-see. So a little bit tentative and that certainly impacted I think the results in the quarter. But what goes down, comes up and vice versa, so none of this stays the same for very long. And as that comes back, we’ll pick up that activity, so that definitely had an impact and that was part of the mix within the quarter.

Okay. Thank you, Mike. And you briefly mentioned I think the spike in jet fuel on the last day of June and that’s negatively impacted your gross profit. Can you help me understand how that was a mark-to-market aspect of it and why that negatively impacted your Aviation gross profit?

Yeah, that was certainly part of it. So on the last day of June, there was a significant spike, I think crude went up $6 to $7 in that day alone and jet fuel prices went up somewhat consistently. So there’s a mark-to-market on our hedges. And we wouldn’t see the physical benefit of that until July. So a good part of that will likely come back in the beginning of the third quarter or that’s past already, right, later came back in July.

Okay. And then my last question here. It sounds like as we think about the land business going forward, next quarter, do you think we will see a little bit of margin compression, is that how we should think about from a modeling perspective?

Margin compression in what period?

In the next quarter in your Land segment.

Yeah. Well, yeah. I think it’s fair to assume that margins would be a bit more normalized because of the comment they made about crude. So that’s a fair comment.

Okay. Thank you for your time this evening. I really appreciate it.

Welcome.

And we have a follow-up question from Ken Hoexter.

Actually, I was going to ask you about the gross profit per aviation gallon being down 24%, but I think you just hit it with the crew jumping up on the mark-to-market rate, Ira?

On the land side, that’s right. The crude is on the land side, you’re talking about the crude?

No. I was asking – okay. Then my question is, it looks like the aviation gross profit per gallon was down 24% year-over-year.

That was driven by the combination of the inventory impact that I described, which flows through gross margin and year-over-year decline in government royalty activity, which obviously carries a higher margin in our average.

But it’s all right. I appreciate it.

No problem.

And at this time we have one question from (inaudible).

Thanks guys. Just one quick follow up. I’m wondering if you could maybe touch on the progress you’re making with your government-related business to maybe think forward a year or two to win the wind down of Afghanistan from NATO and U.S. forces we’re going to take place. Could you maybe think just kind of closed in on the progress you’re making expanding your NATO business outside of the Middle East?

Sure. We never really look to acquire a company as an end to the story, but really it means to drive the strategy, we’ve been in the military activities since the late 80s and our NCS acquisition was another step in advance logistics the minute we made the decision to acquire that company. We also made the decision to set-up shop in other locations. So, whether as for humanitarian aid, natural disasters, military activities, maneuvers what have you. So now there is quite a bit of that activity with various militaries and NGOs and while we don’t have anything to report. Now I’m confident that our ability to establish post in very stiff locations it’s something that will be successful at. There is a good amount lot this activity, we’ve got a level of expertise we’ve got you know good cadre of partners. You know, to make these operations and initiatives successful these campaigns successful and the beauty of this is that, you know it’s Kelly core leasing for automobile manufacturers. As we understand how to be successful in these locations we take some of their technology whether it’s you know tendering or partnering with other folks or understanding complicate logistics and we applied to our commercial activities. So we like the activity. You know, we’ve got a lot of talent within the company and you don’t brought us a lot of contacts and we’ve been recruiting folks. So while we don’t have anything specific to report on, I’m confident that we’ll be successful at growing that business beyond Afghanistan.

Thank you, guys. I appreciate it.

Thanks, Jack.

At this time, we have now other question in the queue.

Thank you very much. We appreciate the support and we look forward to speaking to you next quarter.

Ladies and gentlemen, this does conclude today’s conference call. We thank you for your participation. You may now disconnect.