Ladies and gentlemen, thank you for standing by. Welcome to the World Fuel Services 2015 Third Quarter Earnings Conference Call. My name is Palmer 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. And 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. I'd now like to turn the conference over to Glenn Klevitz, World Fuel's Assistant Treasurer. Mr. Klevitz, you may begin your conference. Please go ahead.

Thank you, Palmer. Good evening, everyone, and welcome to the World Fuel Services third quarter earnings conference call. I am Glenn Klevitz, World Fuel's Assistant Treasurer, and I will 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 webcasts, please visit our website www.wfscorp.com, and click on the webcast icon. With us on the call today are Michael Kasbar, Chairman and Chief Executive Officer, and Ira Birns, 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 I 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 the risk factors that could cause the results to materially differ from these projections can be found in World Fuel's Form 10-K for the year ended December 31, 2014, and other reports filed with the Securities and Exchange Commission. World Fuel assumes no obligation to revise or publicly release the results of any revisions to these forward-looking statements in light of new information or future events. This presentation also includes certain non-GAAP financial measures 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 Fuel's press release and can 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 Chairman and Chief Executive Officer, Michael Kasbar.

Thank you, Glenn, and good afternoon, everyone. Thank you for taking the time to joining us today. In the third quarter we delivered results consistent with expectations we provided on our last call. As forecasted we experienced a seasonally strong quarter in our aviation segment, a pickup in our marine segment due to the return of some volatility and a solid quarter fell on land segment where opportunities for growth remains strong. In aviation the team did an outstanding job selling a record 1.7 billion gallons of fuel across both our commercial and general aviation businesses. In commercial aviation we experienced the expected seasonal increase in passenger volume related to summer travel in North America, Europe and Asia. We continue to leverage our sales supply model to support the needs of our customers while delivering an extensive array of value added services. Our business in general aviation teams produced the solid result across our both contract fuel, suite card, software and payment processing services. Our government business in Afghanistan continues to contribute to aviation results and we continue to pursue additional global opportunities involving advanced logistics for military and commercial clients. Finally, positive results from another successful tender season has positioned the core commercial business for a strong finish to the year and continued momentum into 2016. In the marine segment, volume again increased to a record quarterly level of 8.6 million metric tons and we continue to believe that our market share gains will serve us well and certainly when conditions in the market improve. We had annual run rate of more than 34 million metric tons we continue to maintain the largest independent market share in the industry. As we mentioned on last quarter's call, an uptick in volatility during the beginning of the third quarter contributed to…

Thank you Mike and good afternoon everybody. Before I begin the formal financial third quarter review, I would like to point out a few changes to the way we will be presenting financial information each quarter going forward. Rather than discussing both sequential and year-over-year comparisons, we will now generally only review year-over-year information, which we believe is most relevant and consistent with market practice. We have also now added segment volume information to our earnings release, which I know makes many of you very happy. Consolidated revenue for the third quarter was $7.8 billion, down 33% compared to the third quarter of 2014. This decline was due to lower oil prices offsetting part by increased volumes across all three of our business segments. As reflected in our earnings release, our aviation segment volume was a record 1.7 billion gallons in the third quarter up 165 million gallons or 11% year-over-year. Volume in our marine segment for the third quarter was a record 8.6 million metric tons up approximately 2.1 million metric tons or 33% year-over-year. Broker business activity for the quarter was approximately 12% a total marine volume as compared to 8% in the third quarter last year. Our land segments sold record volume of 1.3 billion gallons during the third quarter up 160 million gallons or 14% from the third quarter of last year. Total consolidated volume was a record 5.2 billion gallons up 20% year-over-year. Consolidated gross profit for the third quarter was $227 million. That's an increase of $12 million or 6% compared to the third quarter of 2014. Our aviation segment contributed a record $107 million of gross profit in the third quarter, an increase of $11 million or 11% compared to the third quarter of 2014. While the aviation segment benefited from traditional summer…

[Operator Instructions] And our first question comes from the line of Jon Chappell from Evercore ISR. Please proceed with your question.

Thank you. Good evening guys. So, I know you are never out of the acquisition market, but seems like you are back to certain extent with what you did in the third quarter and then Ira in your comments you also mentioned that some of the cost associated with acquisitions in the third quarter were for some other things beyond the two that you actually closed. Generally speaking what’s the M&A landscape like right now under certain segments where more opportunities exists and really what kind of what’s you financial [indiscernible] appetite to may be ranch it up the M&A a little bit.

Jon, I’d say that again, we closed the two deals during the quarter, which is more than we have done in a while. It’s a good start. I’d say the landscape is pretty solid. There are a lot of opportunities out there. They don’t all make complete sense and someone seems to make sense earlier on and then as we get into diligence, they make less and lesser and some make more and more. So they are really all over the lot, valuations are all over the place and some segments valuations have gotten to the levels that really don’t fit well with our appetite or returns for example. But in a nutshell there are a lot of opportunities that still fit within what I would describe the sweet spot for us and they are really across all three segments. Clearly there are a lot of opportunities in land being the largest market that we serve worldwide. We have been expanding our global energy business, Mike may talk a little bit about that a little later, which is still small, but there are lots of small to medium size opportunities there. And even in aviation marine while you may not think so there remain a plenty of opportunities for us to sink deep into so lots to look at in terms of our capacity as I mentioned in my prepared remarks are down the sheet a still very strong, we have got a lot of cash on hand and granted a lot of that is offshore, which increases our appetite to do some acquisitions over in other parts of the world. But even domestically, we have liquidity to make a pretty serious dent in the M&A space while maintaining a solid balance sheet profile, which is something we are always very focused on. So I think there will be more news to come. It’s up to tell when certain deals come to provision, some happen very quickly, some take a very long time, but the good news is they are lots of opportunities for us to continue to pursue.

All right. I'll ask my follow-up for this on and for asking a different second question. I think the last time you guys gave any kind of broad numbers around market share might have been Annual Day five years ago and Mike mentioned in his prepared comments that your large independent market share in the marine business, we get this question all the time is certainly way to just give a range of percentages with what the market share is in the three main businesses right now.

It’s pretty small in our land business, because it’s such a large business. On aviation, which mid single digit I’d say and then in marine it’s probably low double digit.

Okay, that helps. And then my second question I don’t want to bring up the recent past, but I am only bringing up because this seems to be more than normalized quarter. With hires now three months or six months we are going to say, the second quarter kind of sticks out as super anomaly relative to the results over the last five years or so. Have you learned anything else about what may have resulted in such a wide swing in results in 2Q and your ability to bounce back to what I would consider kind of normalize range of results sooner or after.

It’s sort of interesting, we chatted about that and you know I guess this is certainly good news and bad news. We feel really good about our company. I mean I think we have got an extraordinarily good company with a great business model and just a fantastic seeing your team. It's sort of interesting when that price dropped. I think in the World Fuel, many years ago we would have got ourselves in a room and would have been in that room every single day and I think it’s a reflection of the level of sophistication that we have in our company that we feel and it's true that we got significant capability. We got fantastic balance sheet. We got very smart people, but the impact of that I was kind of pervasive and probably we could have done some different things. There are certain secular dimensions that really are bigger than us in terms of just the macro markets and all of that, but certainly we commented about the different market segments that we are tremendously impacted than you look at the offshore side of the equation and the fact that the market dropped, everyone thought was the bottom and then it dropped again with no clear view of which direction the market was going in and people just simply stop hedging so. That was a part of it. But I think it was really as big as you get, you really need to be looking at these things very closely every single day and we do. But that was fairly, fairly sizeable move and as I mentioned in my opening comments, we do observe those risk for our customers and our suppliers but the basic business model is in satisfying end demand, end user demand so we got a very basic driver and the fact that we are monetizing some of this in the commodity side, does hit from time to time but really as I commented last quarter, we got a pretty diverse model and a bunch of those items hit at the same time. So, I think we are back on track and the main thing that I think we’re focused on is really driving operating leverage. We are in pursuit of a global energy management services company and it's pretty exciting and we are making it happen. So we don’t have to go deep into taking risk in any particular area because we have such a diverse model. The thing of course is to make sure we are managing all of those pieces at the same time and I think we are well on our way and you see the things that we’re doing so it's sort of business as usual.

I appreciate that Mike and thanks Ira.

Our next question comes from the line of Gregory Lewis with Credit Suisse. Please proceed with your question.

Thank you and good afternoon. Hi Ira, hi Mike. You touched on it but I mean clearly it was a great quarter for volumes pretty much across the board. Is that I guess Mike, it's like a bigger picture question one is that just the oil fuel market expanding or do you think you guys are just doing a real good job of taking market share away of other players?

We are taking market share. I don’t think you’re certainly not seeing the growth in the market over that period of time that’s for sure. I mean you will see some growth in demand over the long term but we clearly taken market share.

Okay. And then just I mean we’re seeing in the last couple of days, and you mentioned the natural gas business that you’re running and growing. I guess in the last week we’ve seen - you just stepped down natural gas prices, I guess as we look ahead to the fourth quarter, where it seems like the U.S. is swinging a natural gas, should we be – what type of impact will that have any impact on that segment of the business as we look ahead to the fourth quarter just generally speaking.

Everyone has the different view of things. So, with those moments with things that come down clearly you have a little bit of different scenario where it’s a very sloppy market but all of our consumers are short and certainly an opportunity for them to lock-in lower numbers and we work with them on creating a strategy. So, the absolute price itself isn't going to impact us very much so it's really again building volume which is really what our whole game plan is to provide those combined solutions with our U.S. energy management business its procurement, its sustainability, its utilization, optimization, its cars and services, its adding numbers of those different activities that every commercial and industrial user needs to have and we package it in a very convenient solution for them. So it's not just commodity, it's not just and that’s really I think an important thing that everyone should understand is a big part of our value prop is the services. It’s the intellectual capital and it’s the software, it’s the technology, it’s the management capability that we are partnering with our clients and we are all distribution platform for the organized oil community and energy community. So it's beyond fuel, it's now energy and it's all of that packaged together. So certainly we do have some exposure to moving prices and we absorb those risks and I think we do an exceedingly good job of that. But the price itself is early part of the equation.

And just swirling on that Mike real quick, and I know in more recent what we – this is what happen, has there been an increase in traffic do we think or is it that the phone started ringing more following this move or is this sort of something that you’re slowly building out overtime and that’s not the way to think about it.

Are you referring to natural gas?

Yes.

It's the season, everyone is basically again geared up for the reason. So Q4 and Q1, we’ve been gearing up for that and everyone is starting to basically set their game plans so discussion absolutely and this is where you really start to load up.

Thank you very much for the time.

And our next question comes from the line of Ken Hoexter with Merrill Lynch. Please proceed with your question.

Good afternoon Mike, Ira and Glenn. Congrats on simplifying the presentation. Focusing year-to-year and providing the volume data real helpful. Just Mike or Ira maybe your thoughts on the deteriorating environment that we’re seeing in the macro basis obviously WTI is what Greg was just talking on that I guess, but thoughts about the customer side of this in 2008 you moved to reduce your exposure to the market reducing day sales outstanding and the like are you seeing any of that in this kind of market yet? I know Ira you pointed out the bad debt expense, just wondering if that’s anything you’re worried about or concerned at this point in the game or is it still just purely benefit from the lower prices.

If you’re talking about credit risk Ken, is that –

Yes.

So, I think our credit function we talked about this over a period of time, I don't see that as being something that is a huge change, a risk profile I think is pretty constant. We managed to navigate through the markets pretty well and again people have asked this question from time to time have we changed our risk profile, I don’t think we have well - if anything we’re probably had on the conservative side and again we are not looking to make money by taking credit risk. I think we understand what we’re doing and it's really driving market share and growth by value creation. So certainly there is casualty here there in the marketplace there always will be, but I don’t think there is anything that we’re seeing that is undo or certainly nothing we can portfolio.

Then talking about that settling in, is that all settled in now is that share of distributed is there still opportunity to go and win additional - you were talking about market share before is that still something that’s floating out there is that all found in new home and that’s not still available on market?

You certainly had a company out there that was extremely aggressive and there is obviously another insight to the story. Those folks have found new homes after the most part some of them moved around and there is a little bit of municipal chairs there but I think the only significant remaining issue there is the lack of that entire group, and their aggressive determination to grab volume in the way that they grab volume. So we are continuing to do what we do nothing has really changed. Our strategy and our direction and our long term strategic road map really hasn't changed. The markets change in the number of different ways and certainly you have got some of the regulatory environment which is interesting, and is sort of hanging over everyone ones head for 2020, but that's pretty much over. To some extent it’s old news that old news for the folks who have got some of those legal issues. They are starting to wind down to some extent, but that’s pretty much in the past, it’s pretty much over. I don't think the more significant issue but an equally equal driver of that is really price, and the impact on the marine industry that level of prices has had. So that’s made it easier for a number of folks to sort of participate and could be in the marketplace but I think the bigger story is the continuing drag on the global shipping. Market obviously China do have a lot of supply in the marketplace, so the overall dynamics of the market are terrible. So I think the fact that we are still billing reasonably well it’s just testimony to the value of our business model, and the professionals that we have in our company. It’s not a simple business not easy business there is a lot of moving parts and it is live action full time. It’s a spot market and we’ve about 45,000 deliveries every year and every single one of them needs to be handled by a series of professionals, so it’s a very active business, it's not a simple business I think our team does a pretty good job so and it gives you the color you need.

No, that’s great, and if I can ask my second question on it, kind of different subject but same kind of issue you just talked about in terms of the complexity. Ira mentioned Watson and Carter in a couple of different places. Let me just ask a fundamental question. As you make these acquisitions, do you blend them all in, are they still considered separate entities, do they get the same operating sales, I want to understand the level of integration you get on the businesses, and I guess the reason I am asking is they are still extreme seasonality in the Watson business, does that blend over time and we start to see that’s has moved out. Is that just a factor of what that business is that you get such winter seasonality in the fourth and first quarter just want to understand kind of that concept if that moves that over time or if they really do stay separate.

If you use Watson as example Ken, Watson has that seasonality in their business and it relates to certain parts of what they do, there is certainly a concern effort to try to drive more ratable business that comes through each quarter of the year. That’s lot of heavy lifting we get there obviously because the profitability in Q4 and Q1 historically isn't so much greater because of the concentration of kind of winter weather related fuels that they sell. We have integrated Watson with our other U.K. land platforms. It's in various stages of technology related integration but for me a business standpoint. That business has been fully integrated with businesses are more ratable over the course of the year. But they are still a pretty big gap there in that specific example. So as we continue to grow our business in the U.K. that’s one of the things we look at. We got a few folks that we brought into that business who have a lot experience with the land fuels, operations in the U.K. and we know we will be looking to tap into that in 2016 and beyond to try to find more opportunities that can swirl some of that seasonality. But for now it’s not going to change in the short term, and it’s the same protocol of our business where we see seasonality in aviation in the summer, we got things like the icing in the winter months. That's not a gigantic piece of the pie but it’s something that contributes to aviation in the different way during the seasonally weaker winter period. So we look to integrate pretty much everything we acquire with an relatively short period of time. Different businesses have different technical requirements and some happen sooner as in later but that's a standing principal that we have. I think we can do a better job of getting more integration type synergies in the future than we have historically I alluded to that in my prepared remarks as a way to drive more operating efficiencies in our cost structure. But certainly on historical basis we have tried to integrate all the businesses we have acquired as quickly as possible.

I am just going to add a little bit of color to that Ken. There is a good amount of conversions within our land business. So our dealer business, our CNI, which is delivering to end users of national accounts, lubricants are wholesale business at Iraq and then the natural gas and power and risk management in derivatives so there is a lot of similarities. There is a lot of similarities for all of our businesses actually, but we are coming together now with very powerful global platform, which is pretty exciting where we now can approach clients and give them a much more comprehensive service and all of these business are collaborating with each other. That’s pretty exciting and that’s really what we are going after. And then I want to just turn back to one thing that I forgot to mention was maybe the most important thing relevant to OW and that is counterparty risk. I think this is increasingly important issue with OW obviously there is a lot of double jeopardy and within the marine business it’s pretty fragmented. Direct entry is quite low and it is still amazing to me that seeing clients and the industry does not really look so much to counter party risk, but I think this is becoming a much bigger issue supply chain certification who we are doing business with, it is just I think a fact of modern life where people want to know who is on the outside of the transaction. And I think that trend and that transparency that is being driven by the marketplace is right now real house. We have always operated that way and it cost us a lot of money. It’s pretty expensive to do things the right way. It is pretty expensive to do things in a comprehensive way. So we have always tried to fill the vacuum and I think we have in terms of quality control, HSSC, compliance go to conduct you name it. So all of that costs a lot of money, but there is a value to it and any case I think that is the thing that should stick out from OW and so anyway some of the other value prop that are easier in terms of credit line as the prices gone down, that’s been less of a obvious value. I know when I got involved in the business long time ago, we had a French cable address, Retalix machines and your stock in trade was price discovery. It’s no longer price discovery. It’s really significantly more sophisticated parts of the business and in any case I think that’s big party of the OW stories counterparty risk.

I appreciate the timing and all of the answers. Just one quick clarification from Ira if I may, I caught the accretion I missed what you said was the integration cost. You said the $0.79 accretion just what was the number for the integration costs.

Well, what I quoted was $3 million of total integration cost those two deals contribute to that, but some of that $3 million relates to other transactions that are still working progress.

Right now I just finished the number, I appreciate that. Thank you for the time guys. I appreciate the insights.

Thank you.

And our next question comes from the line of Kevin Sterling with BB&T Capital Markets. Please proceed with your question.

Good evening guys. This is actually William Horner on for Kevin. Hi Ira and Mike, may be going back to the marine question and ask in a little bit different way. Mike you provided a lot of great detail. If we could just boil it down a little bit was the improvement this quarter more from the levers you are able to pull internally or do you think it was more from macro perspective with customers looking to you for some of the value propositions and transactional sophistications that you touched on.

I think it's little bit of both so I don’t have a precise cut on it, but it was a mix in both so I can’t give you anything more precise than I probably could, but I don’t know if I want to.

Clearly there are some internal levers, but as we said a couple of times and as we indicated on the call last quarter, we did get a – and that produced the response. So we are able to monetize that.

Yes, that’s fair, I understand you can't give much more detail just trying to get a sense of how much of - may be competitive dynamics rationalizing out there and you guys provide us more color in that arena as well. So may be switching gears to aviation for a second. Obviously it has been in the news what recently with the Obama’s administration decision to extend the troop presence if Afghanistan, so looking at your opportunities in that region, would you expect your activity level to remain consistent with where it has been or do you think there may be some incremental opportunities with that decision.

I think William clearly as we have been talking about this specific issue for a couple of years now, the contribution from that particular activity in Afghanistan has been on decline. I think if you had asked the question a year ago, we would have told you that the number might be zero today in terms of contribution, but it’s clearly hung in there for reasons related to your question in terms of more troops sticking around a way longer than anyone had anticipated. So it’s really tough. There is no crystal ball in terms of the correlation between the troop decision and the level of activity that we see, but clearly those types of decisions don’t hurt and provide us with a greater opportunity that we had before those decisions were made, but it is also clear that it’s very difficult to predict the requirements going forward. We had a much better year-to-date this year than we expected in terms of that level of contribution, but again we don’t have a crystal ball in terms of what that maybe for 2016 into 2017. But we continue to look for similar opportunities that may not be of the size and scale of an Afghanistan with what we have learned from the skills we built in servicing those complex needs in a region like that. And we are identifying opportunities like that it takes some time and hopefully if that starts to low we will find something to fill that void.

That’s fair. I appreciate the color. I will leave it there and congrats on a nice quarter and also secondly thanks for combining the volume in the press release now.

[Operator Instructions] And our next question comes from the line of Andrew Hall with Stephens Inc. Please proceed with your question.

Hi guys, thanks for the question, thanks for the time. Most of my have asked and answered. You guys have talked on past calls and you are on somewhat on this call about customers being somewhat reluctant to utilize your hedging programs. We are just looking out the end of this year into 2016. Do you expect that activity to pick up as your marine and aviation customers try to lock in these low rates.

Well as I had mentioned it’s really a function of what people believe is the future direction of the market. You got with our rand in the back drop with a lot of supply from a lot of demand and the thing that really put people on the sidelines was the secondary drop. So it really just depends on sentiment if most of the market believes that okay we hit the bottom then we are going to see some folks rush to try to cover. But we haven't seen that just yet and you are seeing a number of different folks talk about how it could go lower. So what that is getting people to do is absolutely nothing or very little. So until that changes, I don’t think you are going to see a robust environment.

All right, makes sense. And just couple of housekeeping items. I might have missed this earlier, but Ira did you give what the impact of your aviation sales supply was in the quarter.

No, I didn’t get it. We had a benefit this quarter but wasn’t overly substantial.

Okay. And then what was the volume you gave associated with your Pester acquisition?

Pester acquisition is about little over 100 million gallons.

Okay, perfect. That's all guys. Congrats on the quarter.

Mr. Kasbar, there are no further questions at this time. I will now turn the call back to you for closing remarks.

Well, thanks everyone. We appreciate the support and we look forward to talking to you next quarter.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.