Ladies and gentlemen, thank you for standing by, and welcome to the World Fuel Services' 2019 Fourth Quarter and Full Year Earnings Conference Call. My name is Kevin 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 Thursday, February 27th, 2020.I would now like to turn the conference over to Mr. Glenn Klevitz, World Fuel's Vice President, Treasurer and Investor Relations. Mr. Klevitz, you may begin your conference.

Thank you, Kevin. Good evening everyone and welcome to the World Fuel Services' fourth quarter and full year 2019 earnings conference call. I'm Glenn Klevitz and I'll be doing the introductions on this evening's call alongside our live slide presentation. This call is also available via webcast. To access this webcast or future webcasts, please visit the World Fuel Services' website 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. As with prior conference calls, we ask that members of the media and individual private investors on the line participate in listen-only mode.At this time, I would like to introduce our Chairman and Chief Executive Officer, Michael Kasbar.

Thank you, Glenn. Good evening everyone. Our global team executed very well in the fourth quarter, driving solid results and closing out the year having made further progress within our strategic plan. We sharpened our portfolio, we improved our returns, we improved operating leverage, and we drove cash flow.The aviation segment, yet again, posted a solid increase in year-over-year results in the fourth quarter, driven by a strong contribution from government-related activity, primarily attributable to sales to NATO, as well as growth in commercial activity in Latin America as we continue to expand our supply capabilities in that region.Supply chain optimization of our global network continues to position us as a highly valued and strategic partner, providing cost-effective tailored solutions, in many cases, uniquely capable of addressing our customers' requirements.And finally, we expect to close the previously announced UVair acquisition in March. UVair will perfectly complement our organic growth initiatives and provide additional momentum to the advancement of our global aviation platform.Our marine segment posted yet another quarter of outstanding results, closing out a year that produced the strongest annual marine earnings since 2015. Our experienced and talented marine team did an exceptional job of assisting customers in managing their energy supply before the IMO 2020 low-sulfur regulations that took effect on January 1st.The diversity and global breadth of our supply relationships, our financial strength, and our technical expertise enables us to help our customers navigate the increased price volatility and product quality, availability, and logistics risk that have arisen as a consequence of the regulatory changes.The financial performance of our marine business in the fourth quarter is testimony to the value of our core reselling business and our growing network of strategic physical locations. Both activities complement each other and provide us with an unparalleled ability to manage risks…

Thank you, Mike, and good evening, ladies and gentlemen. Throughout the year, we communicated our plan to deliver profitable and more ratable growth, continue to drive greater operating leverage and evaluate all of our lines of business to ensure we remain focused on our core competencies. I am pleased to report that we executed very well on many of these initiatives and produced a very strong result for 2019.Before I get into the details, here a couple of highlights. We delivered more than $1.1 billion of gross profit for the year, that's up 9% year-over-year. Our full year adjusted EBITDA increased nearly $50 million and exceeded $400 million for the first time, and we generated $229 million of cash flow from operations.Consolidated revenue for the fourth quarter was $9.4 billion, down $630 million or 6% compared to the fourth quarter of 2018. The year-over-year decrease in revenue was principally driven by lower average fuel prices during the quarter as well as the year-over-year reduction in marine volume, offset in part by a year-over-year increase in aviation volume.For the full year, revenue was $36.8 billion, that's a decrease of $2.9 billion or 7% compared to 2018. Our Aviation segment volume was 2.2 billion gallons in the fourth quarter, up 160 million gallons or 8% year-over-year, principally related to our core aviation operations. For the full year, aviation delivered volume of 8.5 billion gallons, up 300 million gallons or 4% compared to 2018.Volume in our Marine segment for the fourth quarter was 5.1 million metric tons, that's down 1 million metric tons, or 17% year-over-year. For the full year, volume in our Marine segment was 20.9 million metric tons, that's down 2.8 million metric tons or 12% year-over-year.The year-over-year volume decline for the fourth quarter and the full year, both related to…

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

Hi. Great. Good afternoon, Ira and Michael, and Glenn. Maybe you could talk a bit about the marine business and to talk about the sustainability of the gross profit, given the environment and your thoughts maybe as we go past that first quarter and thoughts on the outlook there?

Hey, Ken. Thanks. So we got some benefit with the disruptions and some of the adjustments in three and four. And I think we haven't seen how this is going to shake out into a regular run rate yield. You'll see some of the scrubber activity and some of the delays there, but more of the market is going to be spread at a lower price and still continuing to burn high sulfur. So certainly, the clients that are benefiting from our sourcing and logistics, we've done a good job – done a good job in terms of shaping the portfolio from a risk perspective.There's still some out there. But I'm not going to say it’s going to revert to norm. I think that we've got a new plateau there, but I wouldn't count on – into 2020 this being the run rate. I think the marine organization has done an excellent job in terms of managing costs and return on working capital.So certainly, we're at a new level, the marine team, who's done an excellent job. So I think we feel good about it, but that's not a guarantee. So I think you're going to see a higher base but I'm not sure that you're going to see repeat performances of three and four.

Great. And then maybe just talk about, Ira, you just ended with some of the cash, the improved balance sheet, low one, I think it's like 1.1 times net debt-to-EBITDA now. So if those, we've seen that in a while with an improved kind of payables, low fuel price which then adds, I guess, shrinks that payables or receivables level.So maybe just talk about what opportunities you see in the market? Do you see lots of acquisition opportunities? Are there certain segments? Do you want to get bigger in marine now that you're seeing that business turn around? Is it a focus on aviation are still growing land? Maybe just talk about what you do with the cash and your thoughts on the market in this environment?

Yes, I'll start, and I'm sure Michael will want to chime in. So it's nice to have a luxury greater than, I believe, we've ever had before in terms of the strength of our balance sheet and the available capital that we have. And you're right 1.1 times net debt-to-EBITDA is our lowest level in quite some time, which provides us with significantly more liquidity to go out and invest in our organic business, which we try to do every day as intelligently as possible, but also to look outside in terms of strategic opportunities.It's tough to nail down exactly where that next opportunity may be, because there are opportunities across the businesses that we participate in. Obviously, in land, we started growing our diesel or commercial and industrial business with the acquisitions of app and PAPCO a few years ago. There is certainly more opportunities to build out that business even further. And then our Connect business, which has principally been power and net gas, which is our really our newest activity, it's still in the earlier stages of development, not a major contributor to the bottom line yet, but there are lots of opportunities to drive that business further, both organically and through making some intelligent investments.And then even as you alluded to marine or aviation, as you noticed, when we did the deal with Exxon a few years ago, we've been willing to get a little more physical there. That deal has worked out really well for us for now, providing fuel at over 100 airports around the world, something that we hadn't done five years ago.And then there are adjacencies as well, whether it be a technology or service businesses that complement the fuel offerings that we have that extends out our value chain for our customers. So there's a lot. I think we've gotten a bit smarter and a bit more proactive as opposed to historically being maybe too reactive when focusing on M&A. So we're building out our pipeline in a very careful way. And there are lots of opportunities that we're focused on right now. And we're hopeful that we'll be able to start executing on a couple of those in the near future.

No further comments.

Excellent.

Kenneth carry on, I am sorry.

Okay. I though know you said, further comments, but no further comments. So my last one is just is on the restructuring charges. Why we're still seeing them, Ira, you mentioned that you didn't meet the target this year on the cost side because of some of the different things added back in the fourth quarter on the incentive comp. But what are the restructuring charges? And do they end at some point?

Well, actually, the deal, it's a good question because you can't keep our restructuring open forever. So the formal restructuring that we talk – talking about for quite a while, officially ends at year-end or ended at year-end. The principal item that impacted us in the fourth quarter was the write-off of or impairment of certain IP assets that are no longer useful, considering the direction we're taking on the IT side.There were a little bit of cost beyond that was 80%, 90% of that restructuring number. Fortunately, in Q4, we had a actual pickup related to the sale of a non-core business that offset all of that. So our net adjustments, if you will, netted our to zero, that it still on different lines on the P&L.So going forward, at least in the short term, you won't see any restructuring charges in the first quarter. It doesn't mean that we'll never have a restructuring activity again, but we're effectively through that restructuring that's now gone on for about two-and-a-half years.

Great. Thanks for the time, guys.

Thanks, Ken.

[Operator Instructions] Our next question is from Ben Nolan with Stifel. Please go ahead.

Yes. Hi. This is Frank Galanti on for Ben. I had a question on the UVair acquisition. It seemed to take a little longer, I guess, than we were anticipating to get through the regulatory side. Is there any concern of kind of getting too big, running into a market share problem in the aviation side? And I guess, even on the other businesses, it isn't seemed like if a marine or land, but maybe there's something to be said in the aviation.

Yes. We're still a very small percentage of the overall market. So there's still a good amount of runway there, despite the fact that we've got a reasonable presence. It's still a fairly sizable market where a sizable independent player and rest, the largest independent player, but as a percentage of the overall market, it's still quite small.

That's true for all of our businesses, really.

Yes. I mean, even in Marine, which maybe is 10%, there's still a lot of room to roll.

Okay. That's helpful. And then, on capital allocation side. You'd mentioned 2019, there was about $65 million of share buybacks, but I think all of that was done in the second quarter. With kind of where the shares are trading today, it seems to be back where you liked it, I guess, from a capital allocation perspective. Is that something that you guys are looking at more seriously? And if so, what kind of size and speed, which you'd be able to react on, on something like that?

I'll question the stock price is where you like to comment, but we'll leave it there. I'm not sure we're very happy with what's going in the market around this. I think what I can do is repeat what I said on the call. I think we're certainly a lot -- much more open to using buybacks to complement our historical dividend program.And while we won't be in the market doing that every day from time to time, we've shown that we're willing to invest in share repurchases. You never tell you exactly when that may or may not happen. There are all sorts of factors that will impact that decision. But certainly, when we think of capital allocation, we now pencil in sort of amounts for both buybacks and dividends, where we haven't done that historically.

Okay. That’s all I had. That’s helpful. Thanks very much.

There are no further questions. I'll turn the call back to you.

Thanks very much to all of our investors and supporters, and I'm sure plenty of our colleagues on the phone. So, look forward, we feel like we're ready to roll. Markets crazy, but we've done well in the past and down market. So we feel that we're prepared for market conditions, that’s the type of company we are. So look forward to speaking with you again and not too far away. So take care, and have a great day.

And that does conclude your conference call for today. We thank you for your participation and ask that you please disconnect your lines.