At this time, I’d like to welcome everyone to the World Fuel Services 2013 Second Quarter Earnings Call. My name is Mandy and I’ll be your event specialist today. All lines have been placed on mute prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions) 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.

Good evening everyone. Welcome to the World Fuel Service 2013 Second Quarter Conference Call. My name is Jason Bewley, Vice President of Corporate Finance and I’ll be doing the introductions on this evening’s call, alongside our live slide presentation. This call is also available via webcast. To access this webcast or future webcast, please visit our website www.wfscorp.com and click on the webcast icon. With us on the call today are Michael Kasbar, President and Chief Executive Officer, and Ira Birns, Executive Vice President and Chief Financial Officer. By now you should’ve 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 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 our Form 10-K for the year ended December 31, 2012 and other reports filed with the Securities and Exchange Commission. Our comments will include non-GAAP financial measures as defined in Regulation G. The 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’d like to introduce our President and Chief Executive Officer, Michael Kasbar.

Thank you, Jason, and good afternoon, everyone. Today we announce second quarter earnings of $51 million or $0.71 per diluted share or $0.80 per diluted share on a non-GAAP basis. We achieved solid results this quarter and we’re pleased with the outcome. Our team of 2,500 professionals around the world is continuing to create value despite challenging markets and it showed in our results. We ended the quarter with a healthy level of cash and liquidity and had consistent financial performance across the Company. Our Aviation Group’s performance was in line with the first quarter as fuel and services for commercial airlines continue to do well as we had expected. Our business in Asia was particularly strong as we’ve seen 20% growth over the past year. The airline industry overall is experiencing good results as constraints on expansion has been maintained and consolidation has improved industry dynamics. In business Aviation our technology offering is beginning to take shape and we had a good quarter despite the expected seasonal drop in our deicing business. AVCARD which was our first endeavor into technology back in 2007 has achieved an annually compounded growth rate of nearly 20% over the past three years, and now has over 2,500 active customers. It is a key component to our technology offering moving forward. Turning to our government Aviation business, the results were steady compared to the first quarter. We had been anticipating a decline in this line of business as troops come home from Afghanistan and the level of U.S. involvement in the region begins to draw down. This forthcoming drop will likely impact World Fuel in the second half of the year, but we remain optimistic about new opportunities, our experience in this space will create for us going forward. In our Marine business, we…

Thank you, Mike, and good evening everybody. Consolidated revenue for the second quarter was $10.5 billion, up 3% sequentially and 9% compared to the second quarter of last year. The year-over-year change in revenue was entirely attributable to the increase in volume across all three of our business segments. Our Aviation segment generated revenue of $3.7 billion, down $186 million or 5% sequentially, but up $197 million or 6% year-over-year. The year-over-year increase was entirely due to the increase in volume. Our Marine segment revenues were $4 billion, that’s up $250 million or 7% sequentially, and $200 million or 5% year-over-year. The entire year-over-year increase in Marine was a result of the increase in volume as well. And finally, the Land segment generated revenues of $2.8 billion, up $231 million or 9% sequentially and $464 million or 20% year-over-year. The year-over-year increase principally relates to the acquisitions of Carter and Multi Service. Our Aviation segment sold a record 1.2 billion gallons of fuel during the second quarter, up 78 million gallons or 7% sequentially and a 136 million gallons or 13% year-over-year. Volume in our Marine segment for the second quarter was 7.3 million metric tons, up 500,000 metric tons or 8% compared to last quarter and up 1 million metric tons or 15% year-over-year. Fuel reselling activities constituted approximately 92% of total Marine business activity in the quarter, which is inline with last quarter. Our Land segment sold a record 904 million gallons during the second quarter, up 63 million gallons or 8% sequentially and 146 million gallons or 19% from last year’s second quarter. Overall this quarter for the first time, we achieved the volume run rate surpassing 4 billion gallons, representing a compound annual growth rate of nearly 20% since the trough in the market in early…

(Operator Instructions) Our first question today is with Jon Chappell with Evercore Partners. Please post your question.

Thank you. Good afternoon guys. Ira I understand that it's a little bit early in the investigation process for the derailment and I appreciate the information you were able to provide. Just a question regarding kind of normal course of business; have you yet have any customers potentially kind of scale back doing business with you guys because the potential liabilities associated with this tragic accident?

None, whatsoever Jonathan; it’s Michael Kasbar. So, no not in the least.

All right. Thanks Mike. My second question keeping this brief, on the Marine side the volumes took a huge step up and obviously the profitability did as well. I can understand the volatility, the derivative products and other value added products helping with the margin side, but the volume uptick was pretty surprising as well. Is this a sign that despite the challenging environment that you’re still speaking about that you maybe opening up the risk profile a little bit? I noticed in your queue there’s an outstanding claim from STX, which is to be expected given what's going on with STX, but you’re kind of searching for more business now thinking maybe the worst is behind this on the Marine side?

No, absolutely not. It's really steady as she goes, nothing has really changed. Our team is quite innovative. One of the real benefits that we’ve got in our Company it's truly a global business. We’ve got a lot of talented, dedicated folks that really worked the market extremely well. We benefited from some volatility within the quarter that our guys, I mean the ladies were able to create some value and their ability to identify niche market areas where there’s a certain amount of expertise that’s required allowed us to earn some additional margin for providing that level of service. So, certainly the risk profile has not increased. The market is still kind of tricky as you know as well as with anyone. So, it's really just the continuing leverage of our global team, and the benefit of some amount of volatility that we capitalized in the quarter.

Okay, I understand. That’s my two. I’ll turn it over. Thanks, Mike.

Thank you, Jon.

Thank you. Our next question is with Greg Lewis with Credit Suisse. Please post your question.

Hi, Greg.

Michael, could you talk a little bit about the land segment, and I mean -- I guess when we think about gross profit margins they sort of stepped down into the sort of the mid to low 2% range. As we think about that business going forward and we think about the potential from multi-service, how should we think about what those margins should look like going forward? Is it going to be something like we saw back up in Q1, or is it sort of -- do we think this is sort of a good level we should be thinking about?

Yeah, I mean I don’t -- Ira, do you want to serve a comment on it? I will comment afterwards.

Yeah, it's always – sure, Mike could add some color. It's always a tough question to answer. It clearly depends upon the mix of business. I would say clearly this quarter is probably more indicative of the current mix of business activity than couple of quarters back driven in part by the follow-up in crude which had been higher margin and that margin has declined over the last couple of quarters. But once again it really -- we always say Marine is spot, Aviation is more contract, land is a bit of a mix. So to the extent there is some stronger spot activity in some of the more profitable areas that could provide a boost to GP and margins and obviously vice versa.

Our main line businesses have fairly stable margins. So our dealer business, our wholesale business, our card business, our end user business that’s relatively stable activity, they’re value added activities and it's continuing to add value, build our market share organically, obviously through acquisition. Some of the more commodity, sort of aspects of moving different products around some of our inventory activities, obviously you’re going to see some variability in those margins depending on market conditions and how well we capitalize on things. But the basic core business activity is remarkably stable.

Okay, great. And then just touching on the incident up in Quebec, clearly you talked about in the prepared remarks about the insurance coverage on the cargo in the rail, beyond that when you’re moving crude by rail in general, what other types of insurance are sort of boilerplate that we should sort of expect. Is there in a certain amount of environmental and or accidental insurance that is typically carried on those types of -- for those types of transactions?

Yeah, I mean overall Greg, we maintain general liability, environmental liability policies in the name of both World Fuel and the Joint Venture specific to the question about the crude business. And that probably, all of it I could describe so, various policies support different parts of our business. We had some that maybe unique to certain elements of the business in addition to the coverage that we have for product or property damage et cetera. So, I would call it the traditional suite of coverage with maybe the exception of environmental that may not apply to other types of businesses other than our own.

All right, guys. Thanks for the time.

Thank you. Our next question is with Jack Atkins with Stephens. Please post your question.

Good afternoon guys. Thanks for the time. Just going back to Greg’s question to follow-up on that briefly for a moment; is there any way you can sort of quantify what's your self insured portion of your environmental insurance is, and what maybe the cap to that insurance level is? I think that’s one thing people are trying to grapple with when they think about the ultimate exposure that you all might have there?

Yeah, the only thing I can really in all fairness tell you at this time is that our deductibles are relatively low, but that’s within reason all that we could share at this point in time. So, our deductibles in general liability, environmental, product liabilities et cetera all are extremely low and clearly we have limits that we deem appropriate for the business that we do today.

Okay. And then shifting over to the Marine side for a second, for my follow-up; Mike it's, I guess, I got a little bit of a conflicting message from you and Ira, well I guess in your prepared commentary. Would you say that you expect the Marine performance to -- that you saw in the second quarter to continue as you look in the back half of the year or does it sound like that just given what volatility is on more recently that maybe -- it maybe difficult to sort of see that second quarter repeat itself in the third and fourth. I just wanted to make sure I understood what you were saying there.

No, Jack as you know it's a spot business. So, we need to earn that business every day, every month, every quarter. So, it's a slack demand, it's not a particularly easy market and with the lack of volatility that makes it even more challenging. So, we have -- I think that our team has done extraordinarily good time -- good job and we’ve grown our volume, but it certainly has fairly challenging environment. So, our comments really were that we don’t expect there to be any revelatory recovery any time soon. And it will be, I think a good outcome if we were to repeat this quarter.

Okay. Thanks for that clarification.

Thank you. Our next question is with Ken Hoexter from Bank of America. Please post your question.

Hi, Ken. Ken?

Sir, your line is live.

I think we may have lost Ken.

Our next question is with Kevin Sterling with BB&T Capital Markets. Please post your question. Kevin Sterling - BB&T Capital Markets, Stephens Inc.: Thank you. Good afternoon gentlemen.

Hi, Kevin. Kevin Sterling - BB&T Capital Markets, Stephens Inc.: With the Quebec oil spilling up, you guys gave good colors to what you guys did, so thank you very much. My question pertains to, is the three year joint venture Western Petroleum, and so can world feel the parent company be held liable as well or does it stop with Western since it really was operated through that joint venture?

Yeah, so the underlying supply transaction was for the benefit of our crude oil trading joint venture with Dakota Plains.

Yeah, Western isn’t the joint venture Kevin. It's Dakota Plains that’s the joint venture. Kevin Sterling - BB&T Capital Markets, Stephens Inc.: Okay, but I guess, that would it -- I guess it's operated through Western, I mean could it – I mean would the liability kind of stop with Western as far as you can tell or?

The only thing we could tell you is that while the title was in the name of World Fuel we have indemnification from the joint venture as we’re acting on behalf of the joint venture in these types of transactions, but obviously it's all pretty complicated and will be sorted out over time, but those are some of the clear facts. Kevin Sterling - BB&T Capital Markets, Stephens Inc.: :

Absolutely without question. While it's compressed now, I think pretty safe to say that it will not stay there. It will definitely move around. Kevin Sterling - BB&T Capital Markets, Stephens Inc.: :

Thanks, Kevin.

Thank you. Our next question is with Ken Hoexter. Please post your question.

Sorry about that, Ira I don’t know if you caught that, but we got disconnected. On the cost of legal and just, I guess as we think about where it would go and what scale, any exposure to credit lines affected or even discussions at this point or have you seen any impact on credit spreads or impacts to the cost of derivatives?

No, I can answer that as a definitive no. We’ve seen none of that whatsoever.

And your thoughts on the cost of legal; where would we see that?

Well, to the extent we will obviously be incurring some legal costs, much of those costs are covered under recovery provisions under certain insurance policies. So, I can’t tell you if it will completely covered, but we certainly have the right to recover many of the costs we incur under a separate provision of our policies for defense coverage.

Wonderful, I appreciate that. And then for a follow-up on Marine; you had a nice rebound on the gross profit per metric ton, just wondering what drives the volatility here, is it more volume driven or is it the quick move on the Marine side in rates or just pricing. What gets your gross profit moving on the variability?

It's just volatility in pricing. So, movements in pricing – creates an opportunity for us to deploy our derivative strategy and create value in the market place for our customers and suppliers.

So, do you prefer if prices are going in one direction or the other, or it's just volatility overall?

Volatility in general is better for us. So price’s that are moving around and can make up their mind is certainly a good profile for us. Clearly the forward curve if you’ve got a backward dated market it allows us to lock in contracts for our clients over a period of time, liner style clients that want to lock in the value of that forward curve that’s a great profile for us. But just general volatility is a good thing for us because it allows us to create value within a spot market.

Great. Michael, I appreciate the insight.

Thanks, Ken.

Thank you. Our next question is a follow-up with Jack Atkins with Stephens. Please post your question.

Yeah, thanks for the follow-up opportunity. So, I guess to kind of go back to the Quebec incident for a moment if I could; you all issued a statement on your website yesterday that sounded fairly definitive that you didn’t believe that you have liability in the sense, and I guess, I’m just curious if you would elaborate a bit what gives you that confidence with regard to that particular incident and the order from the Quebec Government about clean up expenses?

Well, Jack listen, I think the statement is relatively straightforward. And the MMA and the Government are essentially managing the clean up. So that is what is occurring today, and that was really our position. So, I don’t really want to say a whole lot more about that. We certainly have fulfilled all of our responsibilities and have followed everything we should be following. So, the railroad carrying that product and the local authorities are in control, so we responded appropriately and certainly other things will occur, I can imagine, but we’ll obviously operate appropriately and within the letter of the law.

Got you, and because as we’ve been consulting with environmental attorneys in Canada it seems to us as though in times of emergency situations that the local governmental authorities can compel those that held title or hold title to the commodity to pick up those expenses, and so we’re just wondering given that, the definitive statement that you made on the website made us think that there was something that we just weren’t aware of and I was just curious as to what's driving that, the strength of the statement I guess.

Yeah, well listen. It was fundamentally an improper application of the law. So, the site is being cleaned up by what we believe to be competent folks that are handling that project. And that’s not the role that we should be playing as far as we understand. So, we have acted appropriately and until such time if that changes we’ll continue to do so.

Okay, great; and last question from me, and I’ll turn it over. With respect to the Aviation segment, you’ll made some comments about the military demand being a little bit softer in the second half of the year as the withdrawal from Afghanistan accelerates. Could you just elaborate on that and help us understand sort of what’s the sequential impact we should be expecting, really as in the third and fourth quarter, just so we have that modeled correctly?

Sequential impact of military in three and four throughputs for all?

I mean we had shared the exact number, we just expect that the performance in Q3 and Q4 is likely to be lower than we saw in the first half of the year by few million dollars from a DP standpoint.

And that’s Aviation overall, that’s going to be lower driven by that contract or that’s just that particular contract?

No, that’s the discrete impact to performance in that area on the government side. That doesn’t mean that we may not be able to make that up with improvements in other areas. So, if you look at our performance, to say that maybe more clearly, look at our performance in the second quarter, that’s one flag we raised in terms of what maybe happening to government in the second half of the year. In my prepared remarks I also indicated that in our core business, we expect seasonal strength in the third quarter, which is a rising tide as opposed to having tide on the government side. So where those balance out, obviously we don’t have the exact answer for you. But there is certainly some positives to mix in with the government piece of the puzzle.

Okay, great. Thanks so much for the clarification.

You’re welcome.