Ladies and gentlemen, thank you for standing by. And welcome to the World Fuel Services 2014 First Quarter Earnings Conference Call. My name is George, and I will be coordinating the call this evening. During the presentation all participants will be in a listen-only mode. 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. (Operator Instructions). As a reminder, this conference is being recorded Wednesday April 30, 2014. I would now turn the conference over to Mr. Glenn Klevitz, World Fuels' Assistant Treasurer. Mr. Klevitz, you may begin your conference.

Thank you, George. Good evening everyone. And welcome to the World Fuel Services first quarter earnings conference call. My name is Glenn Klevitz, World Fuels' Assistant Treasurer, 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 click on our website at 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 have received a copy of our earnings release. If not, you can access the release on our website. Before we get started, I would like to review World Fuel's Safe Harbor statement. Certain statements made today including comments about World Fuel's expectations regarding future plans and performance are forward-looking statements that 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. A description of these Risk Factors that could cause results to materially differ from these projections can be found in World Fuels' Form 10-K for the year ended December 31, 2013, and other reports filed with the Securities and Exchange Commission. World Fuel assumes no obligation to revise or publicly release these results of any revisions to these forward-looking statements in light of new information or future events. This presentation also includes non-GAAP financial measures as defined in regulation G. A reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures is included in World Fuels' press release and could be found on its 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 President and Chief Executive Officer, Michael Kasbar.

Thank you, Glenn, and good afternoon everyone. Before getting into the business update, I would like to comment on our recent announcement that my longtime friend and business partner Paul Stebbins will step down as Executive Chairman of our Board of Directors. I would like to sincerely thank Paul for his many years of service, leadership, and especially his friendship. All of us at World Fuel owe him a great deal for the immense contribution he brought to our efforts, all with a sense of humor, wisdom, and integrity. We all wish him well in his future endeavors. Paul will continue to serve as a member of our Board of Directors. Now on to current business activity. Despite continued challenges in the markets we served, we delivered solid results in the first quarter. Our diversified business model once again demonstrated our ability to respond to market dynamics and deliver consistent overall results as we continue to expand our global presence in complementary suite of offerings. We were pleased with the results coming from our land and marine segments this quarter. In our land segment, extreme weather conditions drove volatility in the natural gas market benefiting our U.S. Energy business and we experienced traditional weather related seasonality in our domestic gas and diesel business. Our marine business saw improvements coming from our core reselling activities. On March 7, we were pleased to announce the completion of the acquisition of Watson Petroleum, our largest acquisition to-date. As I mentioned in the last quarter Watson is one of the largest fuel distributors in the United Kingdom and brings with it a very talented and experienced team. The Watson team working with our existing UK land teams is actively growing the business utilizing our increased set of offerings and capabilities. With the impact of…

Thank you, Mike, and good evening everybody. Before I comment on our results, I would like to note that our first quarter land and consolidated results include three weeks of operating results for Watson Petroleum, which closed on March 7. Consolidated revenue for the first quarter was $10.6 billion, up 1% sequentially, and 4% compared to the first quarter of 2013. The entire year-over-year increase was related to increases in volume offset by the overall decline in certain fuel prices. Our aviation segment generated revenues of $4.2 billion unchanged sequentially but up 8% year-over-year. The entire year-over-year increase was related to increases in volume offset by a decline in jet fuel prices. Our marine segment revenues were $3.5 billion, down 1% sequentially, and 6% year-over-year. The entire year-over-year decrease was related to decreases in volume offset by an increase in bunker fuel prices. And finally the land segment generated revenues of $2.8 billion, that's up 7% sequentially, and 11% year-over-year. The entire year-over-year increase was related to increases in volume offset by a decline in gasoline and diesel prices. Our aviation segment sold 1.3 billion gallons of fuel during the first quarter that's flat sequentially, but up 200 million gallons or 18% year-over-year. Volume in our marine segment for the first quarter was 6 million metric tons that's down approximately 250,000 metric tons or 4% sequentially, and 800,000 metric tons or 12% year-over-year. Our land segment sold a record 960 million gallons during the first quarter, up 30 million gallons or 3% sequentially, and 120 million gallons or 14% from the first quarter of 2013. Consolidated gross profit for the first quarter was $188 million, a decrease of $8 million or 4% sequentially, but an increase of $6 million or 3% compared to the first quarter of last year. Our…

(Operator Instructions). Our first question comes from John Chappell. Please go ahead.

Ira, I was hoping you could help out a little bit on the aviation side in regards to the impact of the government business. So you mentioned that it was going to actually improve in the second quarter. I think we had probably been thinking about a slow kind of bleed off of that business but if it's going to drop really fast and then pick back up again in the second quarter. Is there any way to out of that $15 million sequential decline year-over-year, how much of that might be government? And then, how much of that may reverse in the second quarter?

I would tell you about half of the sequential decline from the fourth quarter the $50 million you have heard too relates to the government piece. What's the readout may be in the second quarter is tough to tell. Probably, not as much but I assume we will bounce back a few million dollars. It's very tough to predict. The orders don't come through on a ratable basis. So while true draw down activity continues, I think the needs will be a little choppy along the way. Certainly, the longer-term direction over the next several quarters continues to be down. We just wanted to point out the second quarter because that's information we've really seen based upon the results of the first month of the quarter.

Okay. That helps. Mike, my follow-up kind of what I ask almost every quarter, but this time a little bit more relevant. The marine side pretty steep drop in volumes, however, pretty large increase in gross profit. And if we think about kind of a de-risking of the business in this multiyear trough and shipping, it kind of doesn't really lineup because you probably aren't going to the C or D level type of customers yet. So can you explain a little bit how the profitability was supposed to -- or ended up rising so much, even though the volumes had contracted?

Sure. It's business mix. Our core customers have been the large -- contain a lot of companies. And we all know we've seen their demand for bunkers decline with slow steaming. So that will come back at some point, to some extent but not soon. So we've diversified our offering into different segments, exotic locations, requiring significant logistics or specialized business skill, service products. We've developed a significant expanding lubricants portfolio. We are active in bulk movements. So we've been creative in seeking a more diverse marine audience. And you have to remember it's still a spot business. So there is a good amount of variability in this business compared to other lines of business. And so it's closely been a different mix of business.

And has that changed the risk profile of the portfolio at all?

No, no not in the least bit. That's where risk is, I think as I've mentioned it's not really the game we play certainly not consciously. So it's we have not changed our risk profile in any way shape or form.

Our next question comes from Kevin Sterling. Please go ahead. Kevin Sterling - BB&T Capital Markets: Are you guys -- just kind of a bigger picture question? Are you seeing or anticipating any impact from the various sanctions against Russia in your business?

Our sanctions obviously and I guess the best way to answer that question is we're used to international business and disruptions like that's happened from time-to-time. Certainly we operate in a world where there is always been sanctions of some sort or another. We manage our exposure to certain countries with risk profile commensurate with the particular areas that we're dealing with. So we have exposure in all of these countries but based on past experiences we're optimistic that we will manage these issues the way we've always managed them. So we're not undue concern and we've got very active and professional compliance team. So it's the normal course of doing business in the world today. It's not unusual and we're geared up and prepared to deal with these types of issues. So fortunately we've got a very confident and professional, legal and compliance team, and financial team, so and risk team. So it's obviously an issue and it's really part of I think our value prop is to be able to navigate in markets like this. Kevin Sterling - BB&T Capital Markets: Okay. And you touched on the weather and obviously the extreme volatility we saw and may -- it sounded like it benefited your land business. Can you kind of talk may be big picture, Mike, on kind of the resiliency of your business model or the proposition of your business model when there are disruptions like this whether it's caused by weather or something else and your ability to procure fuel for your customers and how it may have helped you some this quarter and how customers turn to you guys for help?

Certainly. I think we may have mentioned. I don't recall. But when there were disruptions on the aviation side of the equation back when we had Sandy, we were able to procure diesel fuel for some of our airline customers to keep their office operations and business operations going. So that was a great benefit and certainly differentiated us from some of our competitors on the aviation side. But I think the diversity of our business model is really something that's pretty important. We are a global business that is diverse and all of our different business cycles we're involved in a lot of different products. Our de icing fluid obviously benefited we're an exclusive distributor for Dow Chemical and that certainly was something that we benefited from unnatural gas side, there were significant probability in that part of the equation. We are active in that space by virtue of U.S. Energy. So we ended up getting a pick up there. And it's the beauty of having a hand in so many different business cycles and different business segments and products that if one is being impacted perhaps the other one is benefiting, and that's been our experience. So while we may not be so simple to model out each and every one of the individual businesses, the overall result is obviously what we're focused on. So those weather disruptions are certainly the reason why a company is in, particularly companies that rely on these products to run their operations rely on a company like us because we have so many different sources and solutions for them. Kevin Sterling - BB&T Capital Markets: Okay. Great. And, last question here. As you look at your acquisition pipeline, I think you talked about it being robust. Where do you see the most opportunity is it still in the land business or is it across the board?

It's really across the board as we continue to grow our business globally and extend and diversify our offerings. We increase the richness of our opportunities and our confidence in the area of M&A continues to grow. So we think we're going to be able to accelerate intelligent profitable growth through M&A and I think it's something that continues to impress us, because we have a good track record as a confident acquirer. So it makes us a company that many sellers want to consider. So we feel pretty good about our ability to continue to utilize M&A as a great way to accelerate our profitable growth into the future.

Our next question comes from Jack Atkins. Please go ahead.

So I guess Mike just to go back first to your comments on the marine side of the business. John did point out the decline year-over-year in the marine volume. I'm just curious just based on your commentary on the fourth quarter call and as you look out over the state of that business today just the maritime industry in general and the role you play there. Could you may be comment on how you see that particular industry developing as you move through the year in terms of just the supply/demand dynamics and the opportunity for may be returning to some volume growth there?

It's one way; it's for us it's really about risk and return. So the reason why we've elected to take a more diversified approach as opposed to getting into increasing the volume either at lower returns or increased risk. So I'm not expecting that we're going to see a dramatic change within our marine space. So we are really investing more in a long-term proposition. I think that we have got a fantastic organization. We've got some of the best professionals within the marine space we've been doing it for a longtime. So really more focused on long-term sustainable value and profitable growth. Obviously producing a quarterly result, excuse me, is important but we're really much more oriented to understanding how we can partner up with the best companies in the world and leverage or fantastic global platform to be able to provide them with an overall service. We know what we do, we've got a lot of folks focused on this area, we've been doing it for a long, long time. So the market has changed, ship owners have changed. So we're reflecting on that from the perspective of rather than dropping down into a lower return business is there a way that we could put together our significant products and services and be able to offer an overall service to our clientele. So we're fortunate that we have diverse business model. So that if one of our business segments is experiencing a tepid business cycle, they've got the opportunity to re-gear revisit while the other segments carrying the load. So it feels pretty good about our long-term prospects. I'm not forecasting that we're going to have any significant return to the marine business anytime soon.

Okay. Okay. Thank you for that insight there. Ira, when I look at the Aviation gross spread per gallon in the first quarter I think a lot of us are trying to understand sort of the -- what the business from a profitability standpoint that aviation business will look like after the NATO draw-down is complete. And understanding that you're going to see a bounce back in the second quarter but is that $0.053 per gallon roughly is that the right way we should be thinking about gross profit per gallon in the core business excluding that NATO contribution?

I would say it's tough to give you an answer on a quarter-by-quarter basis but I think over the course of the year excluding that activity the number we produced this quarter is certainly on the low side. So I think $0.065 in the fourth quarter, $0.053 this quarter I think the run rate is more likely somewhere between those numbers.

Okay, that's helpful, thank you. And then last question for me, it's more of a housekeeping item, but Ira the move of the Dakota Plains joint venture out of your consolidated results I think created some noise year-over-year in terms of operating income. Just curious if you could provide the amount of operating income that joint venture provided in 2013 so we can sort of get a good year-over-year comp there?

It runs -- it's really relatively small, Jack. It runs at less than a $1 million in operating income.

In 2013?

Yes.

Our next question comes from Ken Hoexter. Please go ahead.

Can you, Ira, maybe delve into the cost increase a little bit? It looks like you're talking about $15 million, $20 million increase year-on-year. Can you break down what is Watson, what is incentive comp? And then I guess the second part of that same question will be can you talk on seasonality on Watson yet in terms of how we should see that fluctuate through the year?

Yes, a few questions there. Watson clearly didn't have much of an impact in the first quarter because it was only in for a few weeks. So when you look at the increase year-over-year it more relates to acquisitions made in the past like Multi Service, right, because Multi Service was I guess in the beginning of last year. So it's a combination of compensation and some of these acquisitions that we concluded during the year like U.S. Energy that Mike alluded to on the natgas side. Even before Watsons we made a series of smaller acquisition that are currently being integrated into Watson in the UK that we didn't necessarily advertise because of their individual size. So I would say those are the bigger drivers there. You also asked about Watson going forward?

Yes, I mean that part of the question which is where the top-line but on the first question was just what you're hitting on the expense side in terms of that ramp up what was from Watson, what was from incentive comp that you had mentioned?

Yes, so in the quarter going forward the forecast that I gave for Q2, the incentive comp fees $2 million and Watson is probably about $7 million. So most of the increase relates to those two items. If you look at the midpoint of my guidance versus the result in the first quarter.

Okay. And then the second part of the question was just talk about seasonality on Watson as you go forward near the top-line?

Yes. As mentioned when we originally announced the deal, the seasonality from a seasonal strength standpoint is heavily tilted towards Q4 and Q1. So while we'll see some benefit in the second and third quarter, the benefit will be more pronounced in the fourth quarter this year and then obviously the first quarter 2015.

And then just a housekeeping question, just like to wrap it up but your thoughts on the -- any update on process on (inaudible) on the railcar side, anything to update on that process?

Yes, I would say -- Ken thanks for asking. There's really nothing material to report. The environmental proceedings in the U.S., Canadian and Kenyan lawsuits are as expected progressing very, very slowly. And as we've said before, any final determinations on liability is still a very long way off in our estimation. And once again, we continue to believe that the actions against us that are out there are clearly without merit and we intend to continue to vigorously defend ourselves against them. But nothing really has changed meaningful since last quarter.

Our next question comes from Gregory Lewis. Please go ahead.

I just had a couple questions. Real quick on Multi Service you touched on the building out of Multi Service and still ramping up. I guess my question is what type of impact to gross profit margins do you try to get the sense that Multi Service has had on any particular segments since it's sort of been implemented and as we think about that going forward and I can always harp on internal capital. At what point do we think Multi Service starts to positively impact return on capital?

First question is easier to answer than the second. So the first question what are the reasons that we provide or I provided in my prepared remarks, the fuel related GP is so that you could parse out the profit per gallon from fuel related activity without it being adulterated by Multi Service. The impact is probably about a penny. But as I indicated earlier, land for example had $71 million of gross profit in the first quarter, $60 million was fuel related. So the $60 million is the number you should be dividing by gallons to get the really run rate of fuel margin. And then the $11 million is the non-fuel piece. In terms of return on capital, I will let Mike in a moment talk about all the things we get going on with Multi Service. But certainly, from my perspective there are lots of opportunities there to drive enhanced profitability. And since it doesn't have a high capital mark, capital investment type model, it provides us some pretty significant leverage for that to contribute to returns in a right way. Let Mike pickup from there.

Yes, I guess the only think that I would add to that is Multi Service well we haven't seen astronomical growth. We couldn't be happier with the business and the team. And with some businesses, it just takes some time to build up some momentum. Multi Service was the beneficiary of our ad card and software businesses. In the same way that we did a reverse integration with Watson running out of UK land business. So right now Multi Service is running our software and technology business and this takes some time to incorporate. So there is certainly not a whole lot more about what they're doing with those businesses than we ever did. We were attracted to them because they created a fantastic bundle solution to our clientele and to our customers and our suppliers. But it certainly in better hands with Multi Service and we've got to saddle them with transferring all of that and they are harmonizing all of that activity. So we are very optimistic that we are going to see an increased contribution from Multi Service. We are very happy to be in that space and have them run that activity. It's a business on its own and we become a beneficiary as do other clients of Multi Service. So it's really a many fold opportunity. So we're pretty excited about that space and that diversification that that represents to our company. And I'm expecting that we're going to see more significant in that in time.

Okay. Great. Thanks. And then just real quick. You touched on the impact on minority interest pretty clearly. When we think about that impact in modeling that going forward, do you have any sort of guidance for how we should be thinking about that on a quarterly run rate?

Yes. There are two different things and I would try my best not to confuse you, okay. So transloading JV on the crude side used to be a land operating results. But now that we no longer have a controlling interest that is now appearing in the other income section of non-operating expenses, different line than minority interest. There used to be an minority interest piece there when we had control. So it's left on the minority interest line one of the reasons why it's actually flipped to a benefit from a kind of subtraction -- from a subtraction to income is because all that is left is the crude marketing joint venture which made a little bit of money in the quarter, but also our Brazilian joint venture and that numbers calculate not on operating results alone but on net income results and there is a significant amount of interest expense tied to that business. And therefore, the number that you saw on the first quarter is probably pretty indicative of what you should expect on that line which now doesn't have a lot going on anymore going forward for the next couple of quarters.

We have a follow-up question from Ken Hoexter.

Just a quick follow-up. You just gave a great breakout on the land side. You noted what was fuel related, not fuel related. Can you do that for the other two services? I'm just thinking that, Michael, you mentioned earlier on the marine side that you had moved more into some of the lubricating business. Would that still be counted for similarly on a profit or price per gallon point in the same metric that we would use on the fuel, or would that be a little different? So I'm just wondering what side you --

In that example, Ken, yes, it's just smaller volumes but it's part of total volume and that's more traditional profit per gallon or profit per metric ton type of a metric as opposed to Multi Service which doesn't sell any fuel.

Because of the factor that it's measured by volume and price, but does that change -- Michael mentioned that you're changing the mix as time goes on given your move to more profitable businesses. Does that change your gross profit per metric ton or anything of that ilk if you're selling different products within the mix?

Well interesting question, Ken. I would say if you look at the overall business whether it be land, may be not so much aviation, which is principally jet fuel, jet for may be a little bit of add gas, there are multiple products for many, many years right. In land you've got gas and diesel and propane. Now, you got natural gas and all of that is blended together in volume and gross profit results that we provide from fuel activity. In marine, there may be different grades of bunker fuel that we're selling and now some lubricants as well. And by the way, there are lubes on the land side too, but all of that is reflected. I mean, historically, we haven't broken out every single piece of those businesses in terms of contribution from a fuel perspective.

I'm just wondering, I guess, just because Michael mentioned it earlier that it seems to be shifting the tenor of container side is dropping in terms of demand levels that the mix was shifting. So is that something we should continue to look to see the gross profit per metric ton continue to rise because of the quality of the volumes are going to shift or is that always mix going to play an issue there?

Yes, remember, Ken, once again tougher question. It is a spot business and the mix of business in marine is fairly dynamic quarter-to-quarter. We get out larger individual transaction with more complexities in the given quarter and then the next quarter that same volume is made up with a bunch of small deliveries to small medium sized ships of varying profit margin. So it's really tough to nail that down any more clearly than that to be honest.

Ken, we're really trying to figure out how to clip coupons but we haven't cracked the code yet.

Operator?

There are no further questions at this time. Mr. Kasbar, I'll turn the call back to you for your closing remarks.

Well, thanks very much for your support. We feel very good about the strength of our overall company and we look forward to talking to you next quarter.