Ladies and gentlemen, thank you for standing by and welcome to the World Fuel Services 2017 Third Quarter Earnings Conference Call. My name is Scott 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. I would now like to turn the conference over to Mr. Glenn Klevitz, World Fuel's Vice President, Assistant Treasurer and Investor Relations. Mr. Klevitz, you may begin your conference.

Thank you, Scott. Good evening everyone and welcome to the World Fuel Services third quarter 2017 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 webcast, 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 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 the risk factors that could cause results to materially differ from these projections can be found in World Fuel's most recent Form 10-K 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 thank you to everyone for taking the time to join us this evening. Today, we announced third quarter adjusted earnings of $41 million or $0.60 adjusted diluted earnings per share. Despite the major disruptions we encountered this quarter, our team came together in many ways to deliver a solid result. During the third quarter, we experienced a concentrated series of natural events, which impacted our business operations in the U.S., Mexico and Puerto Rico. I'm proud to say our team was the first on the ground to Puerto Rico to get fueling operations up and running for all of our customers. It comes as no surprise to me that we rally together to support our team members and our customers when they needed us most. It's what we do and who we are individually and as a team. It represents the most treasured attribute of our culture. To our employees supporting disaster relief efforts with donations of time, money and heroic personal efforts, I thank you for your compassion and generosity. I am proud to be a member of this organization. During the seasonally strong third quarter, our aviation segment posted solid results in our core resale business in the Americas, Europe and Asia as well as a higher than expected level of activity coming from our government related operations. Additionally during the quarter we witnessed improvements in growth and profitability coming from the ongoing integration of our physical international fueling operations, which we acquired during the last year. Given the headwinds of certain supply and demand disruptions due to the impacts of the previously mentioned natural disasters, we are pleased with our performance. As expected in our marine segment, oversupply, consolidation and changing market dynamics continue to negatively impact the independent bunker fuel services industry.…

Thank you, Mike and good evening everyone. Consolidated revenue for the third quarter was $8.5 billion that's up 15% compared to the third quarter of last year. The increase was due principally to the increase in oil prices, as well as increased volume in our aviation and land segments. Our aviation segment volume was 2.1 billion gallons for the third quarter, up 165 million gallons or 9% year-over-year. Volume growth in our aviation segment was derived principally from seasonal gains in our core resale operations in North America as well as sales coming from our recently acquired international physical fueling operations. Volume in our marine segment for the third quarter was 6.8 million metric tons down approximately 1 million metric tons or 13% year-over-year. The largest driver of the volume reduction in marine relates to our operations in Asia. Our land segment volume was 1.5 billion gallons during the third quarter, up approximately 75 million gallons or 5% from the third quarter of 2016. Such increase was principally driven by volume growth in our connect natural gas business. And total consolidated volume for the third quarter was 5.4 billion gallons, a decrease of approximately 30 million gallons or 1% year-over-year. For the first nine months of 2017 total consolidated volume was 15.8 billion gallon and that represents an increase of approximately 3% year-over-year. Consolidated gross profit for the third quarter was $240 million, an increase of $3 million or 1% compared to the third quarter of 2016. As Mike mentioned earlier multiple hurricanes placed havoc on the fuel markets during the second half of the third quarter. As a result gross profit in our aviation and land segments was negatively impacted by approximately $8 million to $9 million in the third quarter and I'll provide some additional color on the…

Thank you. [Operator Instructions] Our first question is from Ken Hoexter with Merrill Lynch. Please proceed.

Great, good afternoon. Thank you, Michael and Ira. Just on the accounts receivable I guess just really quick Ira you just ran through the numbers there, but with it up 15% sequentially or I guess 25% year-over-year and 15% gross revenue growth. Is there anything to be concern with given that volatility you noted on the fuel or is that not -- I mean, you mentioned the cash tug that it has maybe a little thoughts on that there?

Obviously, prices heavily impacted by the hurricanes where up they bounced around a lot on net-net basis they were up during the quarter, which just drove our working capital investment up because we’re so working capital intensive. So, I wouldn’t call that anything but just natural phenomena of higher prices. Our DSO our day sales outstanding didn't change just the overall receivables where we invoice rather being somewhat greater than the prior quarter in last year because of the higher prices being bill. As prices settle down and we expect that to quite likely that accounts receivable balance is likely to come down over the next couple of quarters and that cash flow would then come back. So nothing inherently has changed in terms of the quality of the portfolio, it’s just purely a price related impact.

Appreciate that, yes just want to check that's a big focus for cash flow. On the -- you noted in your prepared remarks the increased competitive activity. I guess is that particularly in aviation, you were talking about is there a particular geography, is that just the military businesses is that what you just seeing increased competition in all facets?

Ken I'm not -- it's a very competitor world so the barrier to entry in a lot of our traditional businesses has come down. So, it's great for anybody who wants to enter and it's great for everybody who’s in a particular business that wants to enter some other business. So it’s just a very competitive marketplace. So, we’re experiencing competitive pressures and practically everything that we do everyone has got a super computer in their hand so prices are low, credit is available a lot of our traditional value prepositions has been under pressure, which is why we've diversified and moved into some of the more inventory aspects and distribution aspects, which obviously is a challenge. But we've developed those capabilities and leveraging a tremendous amount of technology to reduce cost of operating and increase the value add. So, we're just experiencing it everywhere it’s just the nature of today’s world.

Okay. Is that I guess -- it’s two questions and I guess my follow-up on Exxon maybe can you just give us an update in terms of all the facilities they are all up and running now, can you kind of just give us idea of the progress on the acquisition?

Sure. We've everything has been -- we finished the last pieces of that puzzle in this second quarter and we're still going through the integration learning process. With every quarter we seem to be doing a little bit better that deal has already led to new opportunities for us at other airports in the regions that we serve through that acquisition. So I would say that is certainly picking up steam and it's got a bit of nice transaction for us and we expect more out of it in 2018.

So now, would you throw any financials in terms of is it better than you thought original targets or is it still too early?

It's still too early. And again, the one thing that I mentioned a few times on previous calls was the foreign exchange rates have changed fairly dramatically even though they moved back a little bit recently from where we were or when we initially announced the transaction. So that's still a bit of a handicap if you will. But aside from that, I would say that we're getting closer and closer and in 2018 we should be at the point where we're delivering results very consistent on a local currency basis at least with what we had initially predicted.

Appreciate the time and inside. Thanks guys.

Thanks, Ken.

Our next question is from Gregory Lewis with Credit Suisse. Please proceed.

Yes, thank you and good afternoon gentlemen. I guess Mike or Ira just as the oil price pertains to the absorption of cash and maybe the potential of getting better margins. I guess in Q2 and Q3 oil prices were relatively flat on average. However in the last I guess a month or two we've seen oil prices high, I mean, Brent sniffing $60 a barrel. I guess how do we sort of true up or how should we be thinking about the demand on for more cash to service your working capital and the potential for better margins?

Okay, I'll try that first and Mike can chime in. So we got a lot of levers in working capital, our working capital obviously includes receivables which Ken just asked about and inventory and of course payables to our suppliers. As the prices bounce around we’ve lived through pretty dramatic price increases about nine years ago. We have the ability to turn the dials to a great extent, which impact our overall trade cycle and our investments for working capital. We haven't had the need to do that over the past couple of years, because we've been in this prolong low price environment. As that changes, if it changes meaningfully we can look at the same types of moves that we've employed in the past. And we may need to invest more in working capital, but we could temper that requirement in terms of reconsidering how we go to market, how much inventory we're holding, et cetera. So I would say that's a good summary of the first half of your question. To the second half, one of the areas where we've been very weak recently is on the sale of derivative additions to our customer or the hedging side of our business or fixed price deals. If prices are continue to move up and move up rapidly the opportunity to that type of business to come back picks up pretty significantly. In marine this quarter we probably had our lowest result as far as I can remember in terms of delivering on that part of our business. And also in marine because of the fact that the spot business and it's been suffering from the environment in the overall marketplace, as prices go up we have an opportunity to see some large improvement in marine more quickly than we would necessarily see it in our other businesses just because of the again the spot nature of that business. So marine could get a double whammy, we said this before on the positive side from continued increase in prices from the derivative sales activity as well as just core margins. And the offshore market has been dead for a while as well when prices start getting higher that market could start to expand again and that could pay some dividends as well. So there are a lot of good things that could happen. We obviously have to manage the working capital side of the equation, which I think we proven that we could do very, very well in the past, we'll have to continue doing that.

I'll just add that little bit of color in the interest of time everything that Ira said. So the margin enhancement will I think somewhat turned down. I don't believe that you're going to see prices be sustainable at a higher level. But I think more of where we're going to see our value is more efficient internal operations more services, more value add that we'll be able to drive scalability and be rewarded with volume. So it's really going to be driving volume through a more efficient platform as oppose to simply looking at margin expansion for profitability.

Okay, great. And then just on the I mean the ongoing shift though the company to be in more energy management focused more distribution oriented. As you kind of as you're doing this review, and looking at you're kind of mentioned the desire to maybe sell off some non-core assets. Is that specific to any -- is there any segment that's maybe more heavily weighted towards non-core assets than others or is it pretty much across the whole company?

Yes listen we're not prepared to obviously get into it now, but we go through the annual review and obviously making the right selection and doing more of less and managing your cost, making your selection and putting all of your organic and inorganic trust behind it is the name of the game. So everyone got to do it. We've been pretty acquisitive and we've developed certain things that we just need to make sure that we have the right focus. So that’s something that we'll be talking a little bit more about the fourth quarter.

Okay, perfect. Thank you very much.

Our next question is from Jack Atkins with Stephens. Please proceed.

Hey guys good afternoon. Thanks for squeezing me in here.

Hi, Jack.

So I guess, Mike let me start off in your prepared comments, you referenced the hiring of new COO, he seems to have a significant tech background. You've recently added a new board member as you commented with significant tech credentials. Could you maybe just sort of give us a little bit more color on those particular additions to the team? And what sort of expertise do you expect them to bring that sort of not at within the fold I guess before their arrival. And sort of what do you expect this to produce adding this type of talent to the bench?

Okay thanks. So well, both gentlemen have tremendous backgrounds. And we're excited to have them with the company. So obviously technology today is critically important. It's really the part of every business; no business can exist without it today as we know. So it's a great combination. We’ve been on this journey for quite some time, not only in terms of our internal necessity for what we do in terms of being a low cost provider. The amount of information that we process with a tremendous amount of proprietary unsearchable data. We've got a tremendous combination of domain expertise so that combined with today's tools and analytics I think is a potent combination for us to be able to complete in the market. We've always operated at a global network with our marine and aviation business, their platform. So looking at our internal operations, driving data infused workflows a big part of what we're trying to do is just leverage all of the information and network that we have is critical. I mean, there is just so much going on. I mean, I could talk to quite a bit on this in terms of machine learning, instantaneous credit decisions. So there is a lot of things that are challenging our legacy model and now incorporating those basically building on the past leveraging the future. It's an omnichannel world, we're delivering in the virtual world with e-commerce, technology, third party, inventory, physical distribution. All of those required technology to telemetry telematic. So accelerating the development of our global land platform including Connect. So liquid gas power putting that all on one platform is very powerful. Global companies are looking for single source solutions where they can get tremendous amount of information to be able to manage and leverage their indirect expend.…

Absolutely, that's encouraging. Okay, great. So just kind of shifting gears here for a moment, you talked earlier about the strategic review and the potential for some non-core asset sales or divestitures, but I think back to World Fuel historically being an acquisitive company the Exxon, Imperial Oil integration seems to getting away very well from what IR was just saying and updating us. So, I guess with the background of potential divestitures and asset sales, are you guys still have that appetite for M&A and sort of how should we think about that being focused going forward in terms of what you are looking for?

Okay. Listen we’re always open for business I think I had answered this question couple a quarters ago. So it's being very thoughtful and very specific about what and why we have done a lot of it as you know and it's always about raising the bar and using it to accelerate the transformation the transition. So, I think we get better at it every day. On our energy management side, we feel pretty good about that and were really just the reflection of the marketplace. So lots of what we are doing is really transforming with where the markets act it’s leveraging all of the same that we have done well and the international experiences that we have the deep domain experience that we have within energy and logistics. But realizing that there is lower barriers to enter, which is why this omnichannel world is so crucial because people want, what they want, how they want it, where they want it, when they want it and you’ve got to basically live in all these different dimensions. So you’ve got to live in the virtual world, they want networks to create that delivery of global fulfillment and then you need to be doing it within the fiscal world as well and ramping everything up with technology. So, I think you’ll see on the menu certainly technology distribution really anything that is going to provide what our customers need. So see the build or buy and we've always looked at the human aspect of it in terms of bringing in talent. So, we've done a bunch of tuck-ins I think that we're getting better at this and doing more meaningful acquisitions where there is some amount of synergy is not so easy. One of the things that I tell you we will be very reluctant to do is to buy companies that we can’t plug-in to a platform. So the technology side of it is crucial, very difficult to get the value when you don’t have a platform and you're not eliminating some of the cost and we've done a little bit of that. Some people may call stringing some purpose together. And so we're going to -- we're not going to do too much of that. So I don't know if that's helpful in terms of an answer, but we've made lots of mistake. And we've got with the little bit of age now running as faster, jumping as high but we’re a little bit smarter. So we're picking our places little bit better.

Okay, that makes sense, Mike. And then last question from me and I'll turn it over. But Ira, just going back to your comments in the prepared remarks on the hurricane impact. I guess I was having trouble following, because it seem like there were some headwinds certainly from the hurricanes but they are spread out among the different segments. But I think there may have been some benefits as well offsetting some of that. So is there a way to sort of frame up what the net impact from the hurricanes were to the third quarter just so we can kind of have that number and think about how ex those items the company performed?

Sure, the hurricane impact themselves aggregated between aviation and land, we're somewhere between $8 million and $9 million about five unchanged on the aviation side and three unchanged on the land side. The reason why we're able to still produce a number of met expectations is because we had a similar dollar benefit in that incremental government business that I talked about that came through in the third quarter, which related to some specialized requirements that is not part of what we normally do everybody. So it's a fortunate coincidence that that came through right around the same time as the hurricane. So if you net all that out, it nets out to almost zero some gain or loss.

Okay, that makes sense. And I got you. And then that special military business, you're not expecting that to repeat it sounds like in the third quarter that was just sort of a one-off item?

Yes a bit of it trickled into the fourth quarter, still don't know how long it's going to last. So we may get some benefit in the fourth quarter, but we're not sure how much.

Okay, thank you again for the time.

You're welcome. Thanks, Jack.

Our next question is from Ben Nolan with Stifel. Please proceed.

Hey thanks. So I have a couple of questions. The first is maybe going back, while as it relates to sort of how you're thinking about the business going forward and I appreciate that you're obviously becoming much more technologically focused. And I have to go back with a dictionary and sort out what all of the word meant. I think you've talked about there Michael. The -- more simplistically as you look forward at various aspects of your business going into next year. Obviously it sounds like some of the government side on the aviation will you're expecting to slow down a little bit. But where are the areas of organic growths, just in terms of underlying volume that you can look at and say, there is some low hanging fruit out there and we expect whatever. I guess it could be growth or contraction certain areas as you're looking into the business for next year. So anything obviously that you point us to how you're thinking through the business?

Yes, I mean, if you look at our land business, it's really in its early stages, I mean, it's very early innings. And if you look at really our businesses of the future so to speak, and I call them business of the future, but there is a lot of similarities. I said this in the past ship a plane or truck an airport, or seaport, or truck stop, jet fuel, marine fuel, diesel it's a moving target a stationary target it's molecule. So there is a lot commonality and I look to generalize with this and take the labels off because the actual process and the activity there is a tremendous amount of commonality there. So certainly with the natural gas, power and diesel those are the three growth products within today's world if you look at where consumption is going to be. So our Connect business I feel really good about that that one is going to take a little while. So we're building that so that is a business of the future. If you look at C&I business we are seeing more and more clients around the world looking to have a single source of supply and we are doing multiple country contracting where we are getting large multinationals wanting us to supply them in four, five, six, seven different countries. So that’s a great opportunity to grow and there is a lot of similarities between marine, aviation and land there is a lot of intersections, there is a lot of land marine interface, land aviation interface you are looking at the news 20-20 regulations that are coming in with IMO. So we are in a great position in terms of sourcing and managing LNG by virtue of Connect we have got a tremendous amount of natural…

Right. To sort of bring it down to a little bit more of a numerical number as we are analyst here. If you are just looking at the aviation marine business and the land business and saying okay organically from a volume basis here is what I feel like given our service offerings and all the things that we’re trying to accomplish. Here is how much I think the growth rate in those various businesses should be over the next few years. Any sense of what you should be able to accomplish if you are successful?

We wanted to make your job so much easier than that. I am going to have to punt on that I think that we are going to have to try to obviously do a better job of letting that rope out, but we’re going to have to come back to you on that when I think.

Okay, no that’s fine. I understand.

We have got great upside Ben, and as you look at some of the things that you are doing at some of the things that we are doing, if you look at aviation which created some good scalability I think that’s pretty god model and I see the other businesses following that, I mean, that’s 25 years in the making. So but platforms are important we don't have them. But that's why you’re seeing us so aggressive on the technology side because you really do need that. But I hope to be soon able to give a little bit more guidance I am not delighted with guidance to be honest with you, but being able to suggest and give confidence at the end of the day we know that people want predictable, ratable results with the company that they understand and we're trying to make the company a lot more understandable. But it's a complicated world we live in.

Yes for sure. And I do applaud the efforts because I think you are right, I think that would certainly make it easier for people to invest. But my next and I guess last question relates back to something that's come up in last few quarters and obviously in the first quarter you laid out or I guess it was of the end of last year you laid out your aspirations for cost cutting initially I think was $20 million and then I believe last quarter you said you feel like you could add another $15 million to that. Any update on where we are in that process, how much has been done and how much is left you?

I think just really it's an update or actually very similar statement in the last quarter we’re still on track to achieve the previously announced $15 million to $20 million by the end of this year, which is I think the same thing I said last quarter so that hasn't changed. And of course we're going to get some of the annualized benefit of some of the savings that we implemented this year so we'll get some incremental benefit in 2018. I think as we're little of our planning process, we're still very focused in identifying additional efficiencies and when we get to the mid-February call the year-end or fourth quarter call we're hopefully -- we should clearly be in a position to give you some more clarity on incremental opportunities beyond what we've already announced. But we are not done, that's for sure but it would be premature to give you a number beyond what we've already shared at this point.

Okay, that's helpful. Thanks Ira, thanks, Mike.

Thanks.

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

Okay. Well first I wanted to thank my colleagues around the world from the thousand truck drivers we have to our Board. We have a great organization, market conditions are challenging but we truly have a burning desire to succeed. And I want to thank our customers and suppliers and of course our investors we appreciate your support. So, thank you and look forward to talking to you next quarter.

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