Ladies and gentlemen, thank you for standing by, and welcome to the World Fuel Services 2016 First Quarter Earnings Conference Call. My name is Rosy, and I will be coordinating the call this morning. 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 Thursday, April 28, 2016. I would now like to turn the conference over to Mr. Glenn Klevitz, World Fuel's Vice President and Assistant Treasurer. Mr. Klevitz, you may begin your conference.

Thank you, Rosie. Good morning everyone, and welcome to the World Fuel Services' First Quarter 2016 Earnings Conference Call. I'm Glenn Klevitz, World Fuel's Assistant Treasurer. And I'll be doing the introductions on this morning's call, alongside our live presentation. This call is also available via webcast. To access the webcast or a future webcast, please visit our Web site 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 Web site. Before we get started, I'd 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, 2015, 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 Web site. 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. Good morning everyone, and thank you for taking the time to join us today. This morning, we announced adjusted first quarter net income of $54 million or $0.77 adjusted diluted earnings per share. While results were impacted this quarter by the unseasonably warm weather in the U.K. and U.S., and continued weakness in the marine markets, our Aviation and Land segments performed well, with our overall volumes up 6% year-over-year. We produced a solid return on invested capital, and generated $139 million of operating cash flow, further strengthening our balance sheet, and adding to our ample liquidity to fund organic growth initiatives and strategic investments throughout our portfolio. In the Aviation segment, we posted 12% year-over-year volume growth. The core resale business in commercial aviation posted solid gains in the North America and EMEA regions. Our U.S. and foreign military business demand remained resilient. In the business in general Aviation segment our bulk fuel, trip services, charge card, and software businesses posted solid results, which were offset by decline in deicing sales due to the unusually warm weather. Recent comments by IATA suggest that despite some regional headwinds, the aviation industry should see another year of modest growth for 2016, and cargo may also see some recovery over the remainder of the year. Overall, our Aviation segment remains strong, and well-positioned to continue to outpace market growth by leveraging our global platform and our comprehensive service offerings. In a Marine segment, while our year-over-year first quarter volumes remain flat, a continued period of low fuel prices and depressed shipping freight rates have put downward pressure on profitability. In addition, the prevailing industry sentiment that fuel prices were unlikely to rise in the foreseeable future muted the demand for our price risk management products. Looking ahead, dry bulk…

Thank you, Mike, and good morning everyone. Consolidated revenue for the first quarter was $5.2 billion, down 29% compared to the first quarter of 2015. This decline was due to lower fuel prices, offset in part by increased volumes across the business. Our Aviation segment volume was 1.6 billion gallons in the first quarter. That's up approximately 175 million gallons or 12% year-over-year. Volume in our Marine segment for the first quarter was 7.7 million metric tons, up slightly year-over-year. Brokered business activity for the quarter was approximately 13% of total marine volumes, as compared to 14% in the first quarter last year. Our Land segment sold 1.2 billion gallons of fuel during the first quarter, up approximately 95 million gallons or 9% from the first quarter of 2015. Total consolidated volume for the first quarter was 4.9 billion gallons, up approximately 275 million gallons or 6% year-over-year. Consolidated gross profit for the first quarter was $224 million, that's an increase of $6 million or 3% compared to the first quarter of last year. Our Aviation segment contributed $91 million of gross profit in the first quarter, an increase of $6 million or 7% compared to the first quarter of last year. For the quarter, the Aviation segment again benefited from increases in their core resale business in North America and Europe, as well as an increase in U.S. and foreign military-related activity when compared to the first quarter of last year. While we still expect the military-related activity to decline over time, it now appears that the related contribution to aviation profitability in 2016 may very well be similar to what we experienced in 2015. Overall, our Aviation segment performed very well on the first quarter, and is poised for continued seasonal strength entering the strong second and third…

Thank you. [Operator Instructions] Our first question comes from the line of Jon Chappell with Evercore ISI. Please go ahead.

Thank you. Good morning, guys.

Hey, Jon. How are you?

Good, thank you. Mike, I want to ask you about the marine side first. I mean, obviously, I clearly understand what's going on in the end markets there, and the comments about the low [ph] volatility certainly makes sense as it relates to being able to [indiscernible] with the value-added hedging products, but my question is more around the cost side of it. As I look back to my model, I have to go back to the first quarter 2010, to see this type of level of gross profit. So obviously, you want to keep the organization set up for a return to the business, but are there any cost-cutting initiatives that can take place to maybe right-size it in this new dynamic of a difficult shipping market?

No. Listen, you're right on the money, Jonathan -- Jon. This is something that we've been, I think, fortunate over a period of time that we have managed to scale and grow our business, and we've always taken a long-term view of how we are investing in our infrastructure and our platform. What we've got going on today is a little bit unprecedented when you see everything happening in global markets. So we haven't been quick to pull the trigger and do a complete wholesale restructuring. We don't see an enormous need to do that, but we're very focused on getting our cost sorted out. Some part of it is our technology side, where that is an investment, and we are making an investment into building out this global platform, which we're pretty excited about. So, we know we have work in front of us. We are making moves there. Ira has a number of cost initiatives, and we are seeing benefits now from our technology spend. That has been a long road, but we are seeing the benefits there across our businesses. We're getting better at it, but we definitely do have some work there in terms of our fixed and variable. So we are focused on it, and it's something we're not only talking about, but we are making moves there. And we certainly slowed down the expenditure. We have invested in human capital. We have invested in people. There's nothing better. I announced some of those. And within various different parts of our business, if you look at the volume of activity that we have, we're almost 70 million metric tons. If you look at a barrel on a converting of all of our different activity, we had about 1.5 million barrels a day. And really optimizing that in terms of sales and supply and [indiscernible] means that we need to supplement our talent, but any case, we hear the message and we've been actively working on it. So, it's impossible for you to sort of see the changes that we've made in terms of growth, but it's definitely high on our radar.

Yes, completely understand that. My second question, a little bit of a follow-up in, all in one fell swoop here, has to do with the seasonality of the other two businesses. So, Ira, you'd mentioned that in land we're going into the seasonally weaker 2Q and 3Q. However, it also sounds like there was some warmer weather unfavorable impact on 1Q. So first question is should we really see a similar magnitude of decline in 2Q and 3Q? Or may that be a little bit more muted because the 1Q base was a little bit impacted by weather? And then the second question is on the aviation side. Obviously the reverse, heading into a seasonally stronger period there, were there any type of anomalies there that may distort comparisons to prior years or should we see a similar type of seasonal increase there, as we have in years past?

Great questions, Jon. So starting with land, while we were impacted a bit in Watson in the U.K. by weather, January and February were actually record warm months in the United Kingdom. So that impacted us a bit, but still, even when you talk about record warmth, it's still winter, and people are still using heating oil to heat their homes, maybe not as much as they would in a somewhat colder environment. So Q4 and Q1 still have materially stronger results in that particular business than Q2 and Q3. So even though Q1 was off a little bit versus where we would've hoped going into the quarter, we're still going to see a pretty meaningful step-down, as we did last year, going into the second quarter, because that business really tails off in the first couple of weeks of Q2. And there's nothing really different there that we would expect at this point. So you may not see the same exact follow-up, but it's going to be substantially similar. In aviation, I would say you know, good questions, well, normally, you'd probably see a bigger step up in Q2 and Q3 from Q1. But Q1 was a bit stronger than we had originally anticipated. So we do expect a somewhat stronger result in Q2 and Q3. But in this particular case, not necessarily as significant as it was last year, because we had, as an example, we did a bit stronger on the government side of the house in the first quarter than we had originally anticipated in Q1. And that may not continue at that same level in Q2. So we'll still see a step up in aviation, but it won't necessarily be a quantum leap forward.

Got it. Thanks for the color. I'll turn it over.

Our next question comes from the line of Ken Hoexter from Bank of America. Please go ahead.

Great. Good morning. Michael, can you…

Good morning [ph].

Hi, good morning. Can you just talk a little bit about the timing on the Exxon, Ira you mentioned it's pending still, and kind of what you need you need to invest in once you close, where your cash and your technology investments have to go to get that integrated, and the timing with which you can integrate that?

Well, as I said in my prepared remarks, Ken, we shared information last quarter on the estimated timing. It's still really early innings, because there's a pretty healthy runway in getting this integrated on to our platform, which is what the plan was. And it remains. So safer to say that on next quarter's call, we'll be a lot closer to a time where it'll be easier to pinpoint a more specific timing, if there are any updates to what we originally shared. So, at this point, what we shared last quarter. The story is still pretty much the same. And the amount of money we plan to invest to integrate that business is substantially the same as well. But we'll give a more detailed update in July as we get closer to the first closings of that transaction.

Okay. And then I just want to follow-up on one part of Jon's question, which was on the ramp-up in expenses, and given the marine Op income decline down to the $11 million. I don't think I understood the answer there, Mike. Is there still additional steps or things you need to do in the interim to get those profits up? Is there any actions you can take now? Or is that more just kind of run with the business as is until demand starts to pick up? I wanted to understand if there are any activities you can engage in to boost those profits in the interim.

Yes, I mean, we certainly want to be mindful of the changing environment, and the fact that you've had a significant industry-wide downturn. We don't want to take a permanent solution to what we think is a temporary problem. I don't think the market is going to stay here. Certainly it's been here for a while. So looking at our fixed versus variable cost is really what we're focused on. We've had build-up. If you see the market share that we've gained, that's been significant. We still have what I think is probably the largest market share that I know of in the industry. We continue to be focused on grabbing market share, and growing in excess. I don't think the market is growing in any case. So we are taking share. We know that the market is not going to stay this way permanently. So we've got a couple of initiatives there. I don't think we're going to see a dramatic drop-off in cost. So we're looking to do what we've been doing our entire lives, which is providing a superior service that the industry needs. I mean, I started this -- my journey in this industry a long time ago selling fuel from major oil companies. I was just thinking this morning that I was buying fuel from Gulf Oil and Kharg Island [ph] at $10 a barrel. And that's a long ways away. So we've grown significantly. There is, I think, a tremendous need in the marine market for a company that provides comprehensive services. That's what we're focused on. We are going to see the supply-demand imbalance start to straighten itself out, I think, during the course of this year. Folks are not hedging their exposure because the price is low. And it's not as much of a percentage of their operating cost. We think that that's going to change. So we're taking cost out, but we're doing it not in a reckless way. Because we don't think that we've got a real problem that is pervasive. But we will be taking cost out. I can tell you that.

That's real helpful. And just for my follow-up, Glenn, thank you for moving the call by the way, and Ira and Michael. And just Ira, just a quick one, you mentioned EPS was $0.77. In the document it says $0.75. Is that -- you said it was adjusted. Are you adjusting for the tax, or I'm just wondering what you…

No, that's excluding approximately $1.5 million of nonrecurring expenses principally related to acquisitions, including the Exxon transaction, similar to last quarter's comment.

Thank you very much for the time.

Thanks Ken.

Thanks Ken.

Our next question comes from the line of Gregory Lewis with Credit Suisse. Please go ahead.

Yes. Thank you, and good morning. And Ira, just following up on -- and maybe that has something to do with it, the Exxon transaction. Could you walk us through what happened in the first quarter in terms of taxes, it looked like they came in significantly? Was that just a mix of business or was there other things driving that [indiscernible]?

Well, let's take it in two pieces. The core effective tax rate was 15.7%, which is generally in the range of where we've been, a little bit lower. And that's always attributed to mix of business in a given quarter. The actual tax rate on the face of P&L was only 8.7. So that 7% delta between 15.7 and 8.7 relates to a $4 million reduction in our FIN 48 reserves. That's a reserve, as you're probably aware, related to uncertain tax liabilities. And from time to time, those uncertain liability get extinguished, either by passage of time, statute of limitation expires, and you never have that obligation or completion of an audit where we come out on the right side. And that effectively what happened in the first quarter. And you're required to release that related reserve immediately. So that's $4 million out which brought the rate down from 15.7 to 8.7.

Okay, great. And then just -- I know the company generally does not like to talk about giving forward guidance in terms of what's going on in the market. But just as we think about the oil price now. And Mike, you commented in terms of not really seeing any increase in those derivative services. But just as we think about what's happened in the first month of Q2 [indiscernible] April, oil has gone from $35 to $45. Has that sort of loosened up or has there been any increase in the ability to sell derivative services to customers in this market? Because clearly there is some volatility coming back in the oil price, and it's, what some would argue, probably more of a normal sustainable level.

Great point, we've of course seen prices rise pretty significantly from where they bottomed out just a couple of months ago, at about $26 a barrel. Despite that, I'm not a psychology professor, but we still have not seen much of an impact from that increase. And prices are still relatively lower despite the percentage increase from the bottom. And there hasn't been a tremendous change in the sentiment of the buyer in terms of looking to lock in. But as Mike alluded to earlier, that could change very quickly. Eventually you hit a price point where people start thinking differently, and looking to lock in. So far, as I've said in my prepared remarks, we haven't seen any significant uptick. But it's certainly possible for that to change relatively quickly in a price environment that may continue to rise.

And it's ironic because we find more activity when prices are higher, which obviously doesn't make a great deal of sense, because, you know. But you get a lot of folks looking to buy insurance when their house is on fire. So, in any case, we're very optimistic. And we've got a unique value proposition. Because there aren't very many companies that have the combination of both the financial wherewithal and understanding, as well as the understanding of the underlying physical market, and the ability to connect all of those pieces together to give very customized solutions. So, from a risk-management perspective, we really do have an extremely valuable offering that is pretty difficult to replicate.

And then just one quick one from me, it looks like debt expense came down in the first quarter. As you think about the debt expense going forward, is the lower level more of a move by World Fuel to take some -- remove those additional outlier risk customers or is it a function –- or is it potentially a function of the market having [indiscernible] through the worst of it, and things being a little bit stabler?

Well, one of the things we always say, Greg, is despite the crazy world around us managing risk is a very serious core competency of ours. In saying that, we're going to get hit every once in a while, but it certainly isn't ratable. So $1.5 million -- $1.5 million-$2 million has been in the ballpark of what we traditionally reported as bad debt expense on a quarterly basis. On any given quarter, that number could be higher or lower depending upon a bunch of different factors. We continue to be relatively conservative in how we manage that portfolio. And where we do hit some bumps in the road once in a while, we have a phenomenal team that works very hard at ensuring that we come out of those situations in a very strong position. So I don't think you can read that much more into the bad debt expense in this particular quarter. It's pretty indicative of what we've seen over the long-term.

Okay, guys. Thank you very much for the time.

Thanks, Greg.

Our next question comes from the line of Jack Atkins from Stephens. Please go ahead.

Hey, good morning guys. Thanks for the time.

Hi, Jack.

Hi, Jack.

So I guess just going back to the operating expense side for a moment, and I guess thinking about this more from a consolidated perspective, but looking back over the last four quarters, OpEx has grown much faster than net revenue. I guess I'm curious, Mike, I understand the idea of not cutting in the muscle, for sure, but why are operating expenses sort of growing a little bit closer to being more in line with net revenue growth?

Well, again another good question, Jack, and we're very focused on bringing that better in line over the balance of this year. Over the past year, if you look at the year-over-year comparison, a big chunk of that increase relates to acquisitions; many of them relatively small acquisitions, where we don't immediately see the synergies that bring them into the organization. It's still early innings. So more than -- that two-thirds of the increase year-over-year related to expense is related to some of those acquisitions. Some of them have higher expense ratios just because of the nature of the business that they're engaged in. It doesn't mean that it's a bad business. It's just a different business profile, and they are often generating very similar returns, because they have very limited capital invested in those businesses, right? So if you cut through it, it's not as bad as it may look at base value when we look at the raw increase, but in saying that, we do have our [indiscernible] out for us, and we're very focused as Mike mentioned, not just in marine, but looking at the entire business, looking at our corporate infrastructure and trying to identify as many meaningful synergies as we can, and cost reduction opportunities. And that's something that we will continue to focus on over the balance of the year, and hopefully have some more clarity on as we talk to you in Q2 and Q3.

Yes, and I just wanted to add a little bit more color on that. I mean, we're transforming the company. So we started out marine and aviation, our land business is certainly kicking in significantly. As I've said in my prepared comments, we're building out a dedicated platform. We've been borrowing the aviation platform, which worked okay, but not really. So, now we've got a global Oracle platform for our retail business, and with some of our smaller bolt-ons, we're getting day one integration. But we don't have that across the Board on our global business, our global liquid fuels business. That cost a little bit of money. As we look at our multi-service business, higher expense ratio as Ira commented, as we look at our natural gas business, same story there, nice straight cycle, as we look at our power business and our energy management business. And the reason why we're doing that is we're pivoting because we're looking to broaden our customer base. It used to be airlines and shipping companies, and that's great. It's now looking at really the entire world of energy management. So the name of the game is for us to operate in this rich crossroads of energy, logistics, fulfillment, transaction management. We process 8 million transactions per year. We're reorganizing our company. We're taking advantage of our Oracle upgrade to R12. We're changing our global operating model. We're summing up global operating centers to be able to improve the costs of processing a transaction. All of that you know cost a little bit of money. So we know we're living on a quarter-by-quarter basis, but we feel very strong, very confident about the mission that we're on. The company is engaged and we've got some cost that we need to digest; a little bit difficult in this market. You don't have a lot of global growth going on. So, little bit more difficult, but we think we are on the right path, and we're basically transforming the business. So we've got some work to do certainly on the cost side. We slowed it down in a number of different areas. We need to make some additional cuts. We've been doing that. And that is accelerating.

Just to follow-up, Jack, with a couple more comments to your question, which I think are important. If you look at year-over-year, and I know that's simply isolating Q1 of this year versus last year, marine's trend is actually positive, land's trend is slightly negative and had it been for -- had not been for historical warmth in the U.K. would have been pretty much even with last year. So it's really marine that's topping in the scales in the wrong direction. We thought a lot about that already on the expense side. And you know, corporate is up a little bit, but that's where a lot of the transformation type comments that Mike made where we've invested in some very valuable people driving functions that didn't exist before in this organization. So it's not a one-size-fits-all focus that we have for the balance of the year. We're looking in the areas where it makes the most sense, but many of the parts of our business, aviation in particular is performing phenomenally well, and actually has increased its cost efficiency a little bit year-over-year. And you know, anyway, I just wanted to add to that.

Okay. Well, all those comments, Mike and Ira, were very helpful. So, thank you for that. And then Mike, just kind of going back to your comments earlier around marine market sort of balancing out from a supply/demand dynamic later in the year; could you maybe talk about what's driving that? What you're talking about is overall demand for marine services, or are you talking about the competitive dynamics in the marine fuels market itself?

Well, I was really talking about supply and demand just for oil, so…

Okay.

As the price goes lower, you're getting increases, obviously you're getting more driving with gasoline and as you had supply destruction, it starts to come into equilibrium in terms of pricing. So I think that, of course, Iran is pumping, Saudi is doing what they're doing to transform away from an oil economy. I mean it's quite incredible when you look at Mexico, Brazil, the amount of change in the marketplace is just extraordinary. That's great, particularly for a company like us, because we are still pretty agile. We're still pretty entrepreneurial, in some ways too entrepreneurial, and we're looking to balance that out, but my comments really were more along the lines of pricing. Every market sorts itself out. You're seeing a significant amount of consolidation within the container lighter industry. So that is going to create large companies, and those larger companies want global solutions. They want companies that are going to be able to confirm with their compliance and counterparty requirements. And all of that becomes pretty difficult. The regulatory environment is a lot stronger. So, our pivot -- we will have -- 17% of our business will be able to be cloud-based. So that's not easy to do. And the cloud is enormously important. If you want to be a truly global business, the ability to tap into the cloud across your enterprise is not an easy thing to do. And that's what global companies want. Our global energy management business is a phenomenally exciting business in terms of natural gas and power, sustainability reporting. Global companies are challenged to be able to manage energy. Many of them don't understand it. It's quite difficult to look at electric rates and to get your arms around that. All of that is expensive. That's where we're going. It all ties in, in terms of marine, aviation, and to be able to get this ubiquitous fulfillments in terms of creating networks with third-parties, our own physical fulfillment, inventory, assets, where we need them, and then using technology. But anyway, my comment -- sorry for the long answer, it was really more about this asset. We do see the bias is probably on the upside. You never know in this crazy market, but we think that's likely where it will go. And that will be generally beneficial for us.

Great. Thank you, Mike. If I can squeeze in one, quick housekeeping item, Ira, you may have mentioned it, but I missed it if you did; the multi-service gross profit in the first quarter, could you remind us what that was.

$12.5 million.

Okay. Thank you guys for the time.

Just one last thing, Jack, on multi-services, that's been a slow road, but Brandon Spear and Dan Zimmerman and his team there, we've set up a technology council with Masud, [indiscernible] and his fantastic team. We have 400 people in technology. We had engineers all over the world. We're pretty excited about the technology road that we're on. And we're more productive today than we ever had been before. We've got fantastic engagement. We've got a great management team. It's the best management team that I've ever worked with. So, Wade DeClaris is our Chief Commercial Officer, Amy Abraham is our Chief Marketing Officer, Alex Flake has put together a fantastic global legal team in terms of helping us on our day-to-day business, Iris develop great financial, a global financial team, so Joe Simon in our risk management side. So I'm really proud about the management team that we have, and this is the management team that really has a burning desire to succeed and build out a truly unique business. So it's pretty exciting, and we know that results are not banging out the kind of growth that we had when we had tailwinds. But we think that we're on the right path, and we really do appreciate the support of all of our shareholders and customers and suppliers.

Great. Thank you, Mike.

[Operator Instructions] Our next question comes from the line of Kevin Sterling with BB&T Capital Markets. Please go ahead.

Thanks. Good morning, Mike and Ira.

Hey, Kevin.

Hey, Kevin.

Hey. I joined a little late. I apologize if I repeat something you've already talked about, but you know, just looking at the marine and I think within the past year given the low bunker field prices we've seen, we saw increased competition coming into the market, you know, essentially lower barrier to entry, if you will. Are we still seeing competition coming in, or maybe some of that competition is forwarding sharp, is it slowing? We just love to hear your thoughts about, I guess, maybe new competition coming into the marine market.

Kevin, in fact that's really a great question. Thanks for asking it. The marine market is a pretty interesting place. The barrier to entry is quite low. So you've got lots of folks that are in the market, and the entry now is pretty low, credit is readily available. So you've got a lot of people chasing business. And that is absolutely a factor. We believe that long-term, as I said earlier, the market is consolidating, large companies want to know who they're dealing business with. They are looking for comprehensive solutions and services. That's what we're oriented to, not that we don't do business with small companies, we do business with a lot of small companies, but that is a factor within the market today. So that's certainly a challenge within the marine business. We deal with that, and being the low cost provider in almost everything we do, we certainly are objective, and leveraging technology, working our business model, so that we have the right fixed cost for the type of net revenue that we have is certainly something that we have to adjust from time-to-time, but it's an issue. I mean, there's counterparty risk all over the place. The market forgets pretty quickly. It's really quite an extraordinary thing. You'd have thought with today's technology and the amount of information distribution that people would know better, but there're still a lot of small players that are undercapitalized, and the counterparty risk is not insignificant. And those companies do go by the Board the minute that there is an issue. And that is a significant amount of risk within the marketplace today. So that's a factor, and that definitely has some impact on our ability to do business on the fringes.

Right. That makes sense. Thank you Mike for that great explanation. Also, let me just kind of piggyback on that, you know, given some of the headlines of the shipping and kind of the dire nature, if you will, banks are tightening their lending to shipping sector. How does that benefit you? Maybe you could touch on that as banks tighten credit, is that an opportunity for oil fields?

Yes. I mean, it always has been -- we've done an excellent job, our risk team, I mentioned [indiscernible] Simon earlier; so it's something that we think we do quite well. So, between our legal function and within our risk function and our financial function and our commercial folks around the world, when companies get into particular situations, they need some help, and we've been able to go in there, and because we know these companies intimately, we know these market intimately, we understand all of the dynamics of risk. We are able to navigate through that. We've done that historically. So we certainly have that type of environment today. You do have still a number of folks chasing that, believe it or not, but as it gets to more significant companies with significant areas it is an area of expertise that we have. So I mentioned that in my prepared comments, and there are those opportunities today. Clearly what we focus on is providing an enduring value proposition to companies and look to really provide more of an overall global solution to them, but we do have the ability to deal with that risk management.

Right, right, right. And then last question here, in the past you talked about you know, in land segment you want to expand into energy management, [indiscernible] natural gas supply and energy consulting services for natural gas and power. Can you expand upon some of the opportunities you might see at there, whether domestic or international as it relates to that?

That is just absolutely enormous. The size of that market is tremendous. I mean, it's anyone from an aggregates company, to a commercial laundry, to a university, to a hotel, so really any company or any entity that is using natural gas or power electricity that is looking for help on procurement, management, management information, we deal with the regulatory, we provide advisory consulting, engineering, sustainability, facility assessments, price risk management. It's quite extensive [ph], water and waste water services. So, we went into that because we are really following our customer. Ship owners were looking at LNG, and trucking companies were looking at LNG, and you know what, we really didn't know a darn thing about it. So we could have hired a couple of folks, we could have developed a little bit of expertise; instead we decided to acquire into that space, which has been really a great addition to our overall land business. So, when you look at marine on 2020, there is going to be some changes in terms of the regulatory environment. We're extremely well-positioned as you look at whether it's low sulfur, whether it's distillate, whether it's going to be LNG, our land business, our overall engagement with the petroleum manufacturing base, in terms of the supply community, in terms of different fuel blends of low sulfur, all of that comes together to create synergies, and that's really what we are capped into, but the global energy management business, you now have about a 30 unregulated markets in the world. And there are markets opening up all the time. Japan now is opening up their market. They have about 800 sellers of energy. It's quite extraordinary, following Fukushima. So, lots of opportunities. We're looking to tie all of that together. Bergen Energi, tremendous addition to our company, operating in nine countries throughout Europe. So we're really excited about this, and what it does is it's an intelligent diversification of our business where we've got expertise on LNG, where we can now aggregate that on land and marine, and provide our classic marketing services and underwriting services and off-take agreements. And it just opens up a complete market for us. So, anyway, it's really an important of what we're doing today, and it very much dovetails into our overall business. You've got sustainability reporting on aviation, on marine, and we've expertise in that. So that's not something that most companies in [indiscernible] can really provide. And now we have all those capabilities.

That makes sense. It sounds like a big opportunity for you. Mike and Ira, thank you so much for your time this morning. I really appreciate it.

Thanks, Kevin.

Thanks, Kevin.

And we have a follow-up question from the line of Ken Hoexter from Bank of America. Please go ahead.

Hi. I'm sorry, just one real quick one; you have 690 million in cash on hand, you filled up some cash, just want to clarify there were no buybacks in the quarter, so what do you -- Ira, what are your thoughts with the strong cash balance?

Well, as we said last quarter, we've got the Exxon acquisition that's going to close over the next several months, which will use more than $250 million of that balance. So, look, it's there for investments like that, and to re-invest in our business on organic basis as well. So [indiscernible]. We're happy that we got that cash and we could fund a deal the size of the Exxon transaction without having to borrow.

So, Ira certainly turned shy. Our M&A pipeline is pretty full.

Okay. So, Michael, then more focused on M&A than revisiting the buyback?

It's both. I mean, it's both.

Okay.

So we've got significant organic growth opportunities, which is why on the cost side we want to make sure that we've got a full team to be able to process and pursue [ph]. We've got lots of opportunities. They all don't produce income within a quarter. So, you look at all of the transition in global markets, it's extraordinary. I'm a lot younger than Warren Buffett, but [indiscernible] shows 20 years younger, I'm pretty jealous of the 20 and 30 year olds in our company because they're coming into an incredible period in history, where the ability to leverage technology and working global markets is just extraordinary. So [indiscernible]. We will continue to do what we do on the M&A side, and we will continue to really pick up the pace on the organic side as well. So that of course require some dry powder, and we're sitting on a respectable amount of it.

Okay, wonderful. Thanks for the follow-up.

Thanks, Ken.

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

Thanks everybody. We really appreciate the flexibility of our analyst to accommodate the time, and thanks for all of our shareholders, and thanks to all of our employees for doing a great job everyday. We will see 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.