Q2 2021 World Fuel Services Corp Earnings Call
Today's conference is scheduled to begin shortly please continue to standby and thank you for your patience.
[music].
[music].
Ladies and gentlemen, thank you for standing by and welcome to the.
The World fuel services second quarter 2021 earnings conference call. My name is May 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.
If at any time during the conference you need to reach and operator. Please press Star Zero. As a reminder, this conference is being recorded I would now like to turn the conference over to Mr. Greg Glenn <unk> World.
And if he was vice president Treasurer and Investor.
Relations Mr. <unk> you may begin your conference.
Thank you Mike Good evening, everyone and welcome to the World fuel services second quarter 2021 earnings conference call and Glen <unk> and I'll be doing the introductions on this evening's call alongside our large slide presentation.
This call.
Investors to available via webcast to access this webcast or future webcast. Please visit the world fuel services website and click on the webcast icon.
With us on the call today are Michael <unk>, Chairman, and Chief Executive Officer, and IRA Birns Executive Vice President and Chief Financial Officer.
Cause I 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'd like to review World fuel Safe Harbor statement.
Certain statements made today, including comments about world fuel expectations regarding future plans and performance are.
And our 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 and regulation G. A reconciliation.
<unk> of these non-GAAP financial measures to their most directly comparable GAAP financial measures is included and World fuels 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.
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 Casbah.
Thank you, Brian and thank you to everyone joining us today.
And as I mentioned last quarter, our organization continues to evolve and we've been a fundamentally change marketplace.
We have made progress within the digital and energy transition and performed well within a constrained supply chain.
The choppy start stop reopening of markets and broader.
Has the added challenges there is no historical analogue for the dynamics we are experiencing.
Despite this we have done an extraordinarily good job of managing risk and supporting our customers suppliers and partners.
From cyber to driver shortage to credit risk and Lockdowns are.
<unk> has done an exceptionally good job of supporting a very different market.
And while conditions in many parts of the world remain fragile and.
And again performed with both commercial and operational excellence and the second quarter delivering solid results.
And possibly thank our global team enough for their spec.
Our team did and efforts over the past year and a half and we look forward to finally, reconnecting and person when we reopen and our offices this fall.
The aviation market continues to recover with North American commercial passenger activity now back to 80% of pre pandemic levels.
And while international activity towards the longer way to a full recovery.
Similar returned from Europe, it's clear that airports are getting busier and activity is picking up so the prognosis for commercial passenger activity is clearly improving each quarter.
And most of our.
And the operated locations outside of the U S activity was substantially ahead of where we were a year ago.
Lastly, as well publicized and the media our government business and Afghanistan is generally coming to and and as most basins have now been closed I would like to specifically.
We think for hundreds of employees, who have supported us and that region for the past 10 years. We expect some activity continue to continue but this is expected to be modest.
But as sectors within the marine industry are performing well.
The container.
And typically, especially buoyant dry bulk is strong with tankers looking more positive over time and the cruise market slowly entering restart mode.
While our marine business continues to perform well and have been impacted by the lack of volatility and a corollary reduction and demand for.
Segment management offerings.
Our highly experienced marine team continues to build its logistics capabilities and add complementary services, which includes sustainability offerings, leveraging our deep expertise within our world connect business.
Our land business continues to evolve.
And for a little bit growing emphasis and natural gas power and sustainability related services.
Pandemic impact on our land business was less pronounced with volumes already back to pre COVID-19 levels.
<unk> seasonal first quarter results and Europe continued into the first month of the second quarter.
Volume and our commercial and industrial and retail businesses, all performed well during the quarter.
And we continue to gain traction and supporting our long term fuel customers with our natural gas and power and growing suite of sustainability offerings.
On the textile.
Technology front, our team continues to develop a broader suite of offerings to complement our core business activities.
And while it's been a long haul and we're getting closer to completing the integration of our North America land operating platforms with 1 step in this process successfully completed and the second quarter.
<unk>.
This integration will drive efficiencies and will facilitate more synergistic integrations and the future.
I am proud of the team's efforts in these areas, which are critical to our long term success.
Finally, our balance sheet liquidity profile remains strong we remain poised.
And to invest and organic growth as markets continue to recover and.
And we'll be supplementing organic growth with strategic investments, which should accelerate our growth and our core businesses and drive increasing shareholder returns.
I'd like to turn the call over to IRA for a financial review.
<unk>.
Thank you Michael.
And good evening for everyone listening on the phone and on the webcast.
And hopefully you all and joining the summer while continuing to stay safe stay safe and healthy.
Our business continues to perform well and what remains a.
<unk> operating environment and I am.
Proud of our people and all the great work, we have done supporting our customers and managing our business through this extraordinary period and our lives.
We remain extremely engaged with our customers and suppliers and are proactively offering and support.
And we are pleased to see that many of the markets we serve.
And by showing increasing signs of improvement.
Others, including our aviation business and parts of Europe, and Asia have been slower to recover.
Meanwhile, we remain focused on enhancing our value proposition and all other markets, we serve and we're excited about the long term prospects and opportunities that exist.
Channel across our business.
Before I walk through our second quarter results. Please note that the following figures exclude the impact of non operational items as highlighted in our earnings release and the comparison periods exclude the operating results from the multi service business that was sold at the end of the third.
And quarter of last year.
The non operational items, principally relate to acquisition and divestiture asset impairment and restructuring related adjustments and expenses.
To assist you in reconciling results published in our earnings release, the breakdown and the non operational items can be found on our website and on the last slide of.
Existing webcast presentation.
Now, let's begin with some of the second quarter highlights.
Adjusted second quarter net income and earnings per share were $25 million 39 per share respectively.
Adjusted EBITDA for the second quarter was $60 million.
Volume improved significantly.
Lee as markets continue to recover.
And second quarter consolidated volume up 9% sequentially and 33% year over year.
And lastly, regenerate and $37 million of cash flow from operations during the second quarter and $500 million over the past 12 months.
Today's increasing our net cash position to more than $200 million further strengthening our balance sheet.
And now I will review our financial results in greater detail.
Consolidated revenue for the second quarter was $7.1 billion and increase of $1.1 billion of 19.
And 19% sequentially and an increase of $3.9 billion or 126% compared to the second quarter of last year.
Year over year increase was driven by the significant increase in volume across all of our operating segments as well as a 130% increase and average fuel prices compared to the <unk>.
<unk> quarter of 2020.
Our aviation segment volume was 1.4 billion gallons and the second quarter and increase of 230 million gallons or 20% sequentially and double the volume generated and the second quarter of last year for.
Volume increases both sequentially and year over year span.
Spanned our commercial passenger and business and general aviation businesses.
Although they have continued to experience increased activity with overall segment volume and more than 60% of pre pandemic levels.
At this time, we remain optimistic about the second half of the year and beyond however uncertainty remains.
And in many parts of the world, where travel restrictions remain in place and Delta Varian cases had been increasing.
Regardless, we remain in close contact with our customers and suppliers and are ready to meet their needs across our global footprint.
Volume and our Marine segment for the second quarter was $4.
6 million metric tons, an increase of 360000 metric tons or 8% sequentially and.
And an increase of nearly 600000 metric tons for 15% year over year.
Our land segment volume was 1.3 billion gallons or gallon equivalents during the second quarter.
Sequentially, but an increase of 120 million gallons per gallon equivalents or 10% year over year.
The year over year volume increases and the land segment came from improvements in our retail commercial and industrial and wholesale businesses in North America as well as continued growth and our connect natural gas.
Flatter and brokerage businesses.
Consolidated volume for the second quarter was $3.9 billion gallons and increase of 310 million gallons or 9% sequentially and an increase of 960 million gallons of 33% compared to the second quarter of 2020.
Consolidated gross profit for the second quarter was $185 million, that's down 4% sequentially and 6% year over year.
Our aviation segment contributed $88 million and gross profit and the second quarter and increase of 15% sequentially, but a decline of 3% year over year.
Power and year over year decline was driven by a reduction and our government related activity and Afghanistan. As a result of the ongoing military withdrawal, which should be substantially completed by the end of next month as well as a decline and margins principally related to a more normalized business mix as well as lower physical.
Great profitability, and our core aviation business when compared to the second quarter of last year.
As we look ahead for the third quarter, we expect aviation gross profit to increase sequentially driven principally by the continuing recovery in North America, and international and commercial passenger activity.
Inventory and gender Marine segment generated second quarter gross profit of $23 million, that's a decline of 11% sequentially and 39% year over year.
Year over year decline is principally a result of lower profitability compared to the second quarter of last year, which benefited from volatile.
These arising from the implementation of the IMO 2020 regulations as well as the impact of competitive market conditions. During this past quarter, where price volatility is also limited.
As we look ahead for the third quarter, we expect marine gross profit to increase.
Up modestly on a sequential.
<unk> based upon some quarter to date improvement and our core resale business activity and.
We look towards the latter as we look towards the latter part of the year and beyond we expect cruise line activity to accelerate.
And should contribute incrementally to our financial results.
Our land segment delivered gross profit.
And $74 million and the second quarter, a decline of 18% sequentially, but an increase of 8% year over year, when excluding the profitability related to the multi service business from last year's results.
Sequentially, we experienced the traditional seasonal decline, our UK business as well as a decline.
And gross profit related to our business and Afghanistan.
Year over year gross profit and our North American retail and commercial and industrial businesses as well as our connect business oil showed increases when compared to the second quarter of last year.
Demonstrating continued progress and growing our core land business activities.
And next growth is reflective of our increasing focus on natural gas power and a growing suite of sustainability solutions and and now represents nearly a third of land overall gross profit.
Looking ahead for the third quarter, we anticipate land gross profit will be relatively flat on a year over year base.
<unk> when excluding the results from multi service.
We continue to believe that our land segment as many opportunities for growth, both organically and through strategic investments principally in our commercial and industrial and connect businesses.
Core operating expenses, which exclude bad debt expense for 1.
$147 million and the second quarter, which was in line with our guidance for the quarter as we continue to manage our controllable costs well.
Looking ahead to the third quarter operating expenses, excluding bad debt expense should remain in the range of $146 million to $150 million.
And as previously discussed our team has continued to do an excellent job managing our receivables portfolio throughout the pandemic with more than 90% of our portfolio now current.
And our team's efforts have been paying off.
With no recent losses of any significance.
Compounded by successful.
And being certain high risk receivables, which had been previously reserved for this resulted in a credit to bad debt expense this quarter of approximately $1 million.
Adjusted income from operations for the second quarter was $39 million, that's down 7% sequentially, but up 17%.
Percent year over year related to this segment activity that I mentioned earlier.
Adjusted EBITDA for the second quarter was $60 million down 3% sequentially.
That's up 11% compared to last year.
Second quarter interest expense was $10 million thats flat year over year.
And collect as total interest expense continues to benefit from lower average borrowings as well as low rates and.
And we again ended the quarter with no borrowings on our revolving credit facility and and a net cash position again and access of $200 million.
We expect interest expense for the third quarter to.
<unk>, absolutely $9 million to $11 million.
Our adjusted effective tax rate for the quarter was 10, 3%, which is significantly lower and our tax rate and the second quarter of 2020 and the rate. We had previously forecast for this year's second quarter.
And as a result of certain.
And business initiatives, we recently updated our forecasted global jurisdictional income mix, which significantly reduced our second quarter tax rate.
Furthermore, we also had a discrete tax benefit relating to a change and the UK statutory tax rate that was announced during the second quarter.
And a nutshell.
And our second quarter tax rate was much lower than forecast for the reasons just explained for.
For the forecast for changes in income mix will also contribute to a lower tax rate compared to where we started the year with our tax rate for the second half of the year now expected to be and a range of 29% to 33%.
Our total accounts receivable balance increased to approximately $1.8 billion a quarter and.
Principally related to the increase in volume and our aviation and marine segments as well as the sequential rise in average fuel prices.
And we remain focused on managing our working capital requirements, which resulted in operating cash flow generation.
$37 million during the second quarter again, despite a 14% sequential increase and prices and a 9% increase and volume this.
Further strengthened our balance sheet.
And closing in the face of continued travel restrictions and many parts of the world our business continues to recover.
<unk> zone.
Delivering solid results this past quarter.
And despite rising prices and increasing volumes, we again generated healthy operating cash flow, which now aggregate to nearly $750 million over the past 6 quarters.
And as noted many times in the past this cash flow supports our balance sheet with.
Significant liquidity to grow our business organically as the recovery continues and.
Inorganically as strategic opportunities arise.
Yes, our business has been meaningfully impacted by the pandemic through its effects on the needs and many of our customers we serve throughout the world.
But our reserve.
Cover and also shown our resiliency evidenced by our ability to manage expenses prudently manage our balance sheet extraordinarily well and maintain and even grow our relationships with our customers. During this unprecedented time period.
We believe these relationships and our global platform, which combines.
Combines our liquid fuel offerings with natural gas and power with a broad portfolio of services and a growing suite of sustainability solutions will serve us very well as the recovery and global markets accelerates.
Thank you once again for your continuing support and.
We will now turn.
Turn the call over to May our operator to facilitate the question and answer session. Thank you.
Thank you at this time I would like to remind everyone and thank you.
To ask a question. Please press star followed by the number 1 on your.
Telephone keypad, and you will hear of Saudi Telecom and technology.
Our request.
If your question has been answered and you would like to withdraw your registration we spread the number star followed by the number 3 if you are using a speaker phone. Please lift your handset before entering your request as it.
Binder, we would appreciate it if the participants would limit themselves to 2 questions with associated.
And with follow up.
And we'll pause for just a moment to compile the Q&A roster.
We have our first question from the line of.
And along with Stifel. Your line is now open.
Hey, good afternoon.
Gentlemen.
So I guess I will start with my first question you had mentioned specific for aviation and land side that there was a little bit of a negative impact from the wind down of <unk>.
Afghanistan and that will be concluded here and a month or so.
Relative to let's say to Q or maybe.
And the proportion of.
Let's call it EBITDA income from operations.
And the third quarter how much.
How much of that is left to go away.
Would you say.
The best way <unk>, the best way to describe it to be consistent with the past.
And the second quarter.
It still represented 7% to 8% of our consolidated gross profit obviously.
Operating larger piece of aviation's, but on a consolidated gross profit. It was it was about 7% to 8% per.
Probably remain in that ballpark give or take maybe a percent or 2 in the third quarter.
And then after that.
It's possible that a little bit will remain but it'll be.
It.
Extremely small number is 1 location apparently will continue to operate.
And definitely.
So, yes, 787, 8% and Q2 likely a similar number in Q3.
As it has been a lot of activity around the the final exits.
It'll be in and then.
Once we get to Q4.
You talk and maybe maybe a couple million dollars a quarter that would continue from a gross profit.
Standpoint.
Perfect.
Great detail I appreciate that.
And then as my second question.
Mike.
And mentioned at the end of your <unk>.
Marks there that you guys were.
Or at the final stages of some land integration and.
And finally getting to the place where you want it to be.
And.
I was hoping and I guess, there's a little bit more to do on that and I was hoping.
And what all.
Does that integration and tail I mean, what all are you actually talking about it here and then on a go forward basis.
Possible to quantify what that magnitude and finance.
Italy.
And for the company.
Ben.
And we've taken a.
Aggressive.
Thank you.
And.
And I think.
Approach.
And <unk>.
<unk> technology and.
<unk> and digital.
Approach to our land business and really.
All of our businesses.
Somewhere between Q2 and Q.
And she will be.
100% cloud base, where we would have shut down.
And all of our data centers.
And so we've taken an aggressive approach.
2 technology.
And.
And the.
U S businesses, we had 3.
And 3 regions, our east West and central.
And we will be consolidating those on.
And our singular platform pursues and platforms that we'll be able to inter operate.
And so.
And the ability to now handle.
Free national accounts and be able to.
Yet the cost reduction as well as the ability for all of those localized businesses because from our local and regional businesses.
So the vision was really to cover for.
And 48.
Thanks.
And to do that with our own <unk>.
Logistics and inventory as well as third party.
Logistics and inventory.
And we believe that that's going to give us a significant.
Advantage and the marketplace and allow us to give a seamless.
Service level.
When you've got national accounts.
Youre getting a lot of consolidation they want to have a single counterparty that's going to deliver them a level of service to be able to leverage their volume.
We are integrating operationally with these clients through.
Advanced digital portals.
So it goes on and on.
The economic side of it.
And we're expecting to get.
Some amount of.
And.
Efficiencies and cost efficiencies.
Some of those obviously will share with their clientele.
Very into those will.
Keith.
And it will give us scalability and certainly as it relates to future acquisitions, we will be able to.
And hopefully take EBITDA and have that drop to the bottom line.
And so.
That was the reason.
And some of it's fairly ambitious.
And so hopefully that gives you enough color on that.
Yeah and I appreciate it and then that's it.
This follow up question although.
Admittedly unrelated.
I think I already mentioned that the net cash.
And with $200 million.
Sure and kind of been.
Ooh hanging out and a range here and.
Lowest thirties.
At what point do you flip the switch from that.
Activated buyback program here.
As.
<unk>.
File and you say that because as we've addressed this question.
Many times I think we have definitely become more buyback friendly overtime.
We'll probably never going to buyback enough shares to make most of you guys as happy as you possibly could be.
But that's something.
And that is always top of mind for us.
Each and every quarter and we're not necessarily and.
And the market every day, but I think we've demonstrated over the past several years that we've been.
Fairly actively repurchasing our shares.
And to at a minimum cover.
Are the dilutive impact of.
We've got employee equity related awards, and more and we did a good bit more than that last year.
And what will almost certainly have some activity.
In 2021, but we also want to preserve and.
As much capital as we can for for growth right and then growth and.
And.
And business activity as opposed to.
Growth and buyback program so.
And that's always an option for us.
And certainly something were surely considering.
For the balance and art.
And but again, it's 1 of many areas.
Focus for us and <unk>.
And where.
Where that $200 million of.
Net cash gets invested.
Alright I appreciate it thank you.
Your next question is from the line of Sanjay.
Yeah, Robbie <unk> with Bank of America. Your line is now open.
Hey, guys.
Thank you for presentation.
Michael.
And just a question maybe following on from Ben.
And.
Appreciate the thoughts and the buyback, but just maybe just expand a little bit on your thoughts on where you think this business can strategically growth.
And maybe by segment I know, you've obviously talked about and organic growth before and obviously the desire to do it.
Potentially larger acquisition debt.
Just where do you book to grow that business I mean is it is it and another vertical would it be.
The land business, and obviously expanding into maybe potentially green energy, maybe just your thoughts on your thoughts on maybe the industry vertical and and where you think that best fits within the business.
Hey, Sanjay Great question.
And its IRA and.
Michael had some comments here as well, but I think we've been pretty clear over the past couple of years.
On this 1.
Although yes, partially.
Partially blame it on Covid, the fact that there.
For having been many successes to report as of yet.
And.
R R.
Our most significant areas of focus our land business arguably it's the largest market that we participate and globally and the pipeline of opportunities and that business are greatest.
Specifically within that area.
We're focused on our commercial and industrial activities, we did a couple of.
Positions and now exactly 5 years ago.
And that are both performing very well, we've grown organically around those acquisitions and those have been added to our.
And our legacy business that existed previously, but we havent done a whole lot.
So we're we're much more active today in terms of looking at ways to continue to build up.
That platform, which is a real solid ratable.
Strong return type business. So that's 1 area.
You'll hear that we continually talk more and more about our connect business, which.
And I believe maybe our fault, but.
Not everyone.
And externally fully understand how that business has advanced I mentioned earlier in my prepared remarks that connect now represents almost a third.
Net revenue in our land business that's.
And that's an area, where we're doing energy management consulting and the net gas and power areas, where we've got a brokerage business.
Trading and those commodities and we have a growing suite of of.
Of services on the sustainability side, there's obviously a lot of excitement.
And that arena worldwide. There are a lot of folks that have been performing at.
Activities in that regard for long time, and what a newfound companies that are growing very rapidly.
<unk>.
A lot of avenues.
And then we can take.
To build out debt connect business, which has tremendous amount of growth potential considering the world's focus on ESG.
<unk> sustainability and particular, so thats another area, where we're investing a lot of time and energy looking for.
And these 2 to continue to grow organically, but 2 to bolt on some some investments to accelerate the growth.
And that part of our of our land business as we referred to it today.
Michael and anything that I think you did a great job there.
No.
And it is going to be that land business, certainly accentuating the U S.
As a reason why we.
Spent so much time with a land platform.
So a very sizable market, but we're also so.
And diesel globally.
Off of the.
For the back of our global aviation footprint.
Burning diesel for decades, while we're helping.
The card then.
Sorry, with the sustainability and.
And making that a bundled offering so.
And we're able to help.
<unk> helped drive that energy transition and our marine business is a cyclical business.
It's following in the footsteps of aviation I mean aviation's.
Great story, where we have got a global.
Supply chain and we've got a lot of non fuel offerings. So we've expanded that.
And of course for physical logistics.
Footprint is impressive we continue to grow that and go from strength to strength there.
And marine will follow and those footsteps.
It has different dynamics to it.
And then R.
Our defense business I've said this many many times.
Got tremendous capability in terms of providing.
Level of service.
2 a very particular client and we've developed that that started and the eighties.
And when we acquired NCS and 2010.
And we thought it was a sunset business lasted for.
And over 10 years I guess.
So that exceeded all of our expectations and the rationale for acquiring that was to use the capability.
To broaden the base we got.
Terms of our engagement with the defense, we got very caught up.
Within.
And our particular, Afghanistan project, but we have developed those capabilities sets and other areas that.
Welcome to investment, we will grow and organically there is no better growth and organic growth.
And we're being selective.
We promise not to do anything stupid.
There's a lot of ways you can spend your money and we're being careful and judicious about it.
And particularly in times like this you've got a marketplace thats somewhat hyperbolic it's quite extraordinary to see what's going.
And to marketplace. So.
We are being careful playing the long game, but those are the areas there are synergies that cut across all of those.
<unk> got to ship, a play and a truck and airport seaport.
Truck stops so you have got moving targets and stationary targets for all getting few of on ground regardless.
Going out and so whether they go to see where they are.
Flying around and so.
And so all of that creates really this global capability.
To be able to provide liquid to gas.
And power and sustainability solutions. So I don't know so I think it's a great story.
<unk>, providing power agreements we're sourcing.
Renewable 190 renewable power plants.
But we're providing energy advisory services and 55 countries it keeps growing.
And so.
And we've got I think a.
A good future.
With us.
And we feel like we are getting stronger every day.
Very thorough.
That was great.
And I appreciate it.
And especially come to the marketplace and the evaluations.
Maybe just non aviation if we can if we can hit on.
And from some things there and just in terms of.
Some color on the day geographical mix of your commercial aviation business, there and obviously the exposure and volumes out of Asia is going to be.
Closely watched over the next couple of quarters, just given COVID-19, but maybe if you could just walk through where you see the biggest weakness.
Asia, and even in Asia, and how you kind of see the sequential trends through the second half from a volume perspective.
Thanks for the question Sanjay.
I would say that.
We talked on the call about the fact that North America's ahead, right. It's been it's been coming back.
Pretty rapidly.
The largest piece of our pie followed by Europe, and then Asia.
Europe's interesting because thats, where we made the investment a few years back and became more physically present.
Mike mentioned in his prepared remarks.
70, or 80 on air for location.
Patients were.
Either the exclusive or wanted to.
2 or 3 fuel providers.
Those are airports that really got stung.
Pretty pretty badly by Covid.
Most of them many of them being in Europe.
And so thats.
In terms of where we are behind and recovery.
As for.
The greatest opportunity is it's not massive volume.
But because of the physical nature of that activity, it's higher margin activity. So as that comes back it'll it'll.
Pretty rapidly contribute.
To gross profit.
And then there is still more volume and gross per.
And that should be to.
And to be achieved as North America continues to rebound as well.
So we haven't historically given a specific.
Forecast for.
Sure.
Where where volume is but we definitely expect.
Relatively significant increases in volume.
Profit over the balance of the year not back to where we were pre pandemic.
The number of continue to grow from.
Where it is today to higher levels, probably 20% up easily next quarter and.
And fourth quarters too far out to forecast.
Considering all the uncertainties out there so.
There's a lot of runway for for aviation to rebound and the Asian piece is relatively small and the overall scheme of things.
But there is some opportunity there as well.
So.
It's.
It's and improving story, but theres still a reasonable amount of uncertainty as to how quickly the.
And the international markets rebound and Europe, and Asia, considering the latest unfortunate and news about.
The variant and.
We're all waiting to see.
And what that may translate to going forward in terms of.
Additional lockdowns or hopefully the opposite and things settle down and.
More and more markets open up Australia is still locked down.
So we're watching that activity every day.
And we remain optimistic.
Debt, we're going to see growth, but how much growth and volume issue is really dependent upon a lot of other things that I just described in terms of.
Government decisions and.
People movement around the world.
Makes sense. Thanks, Ara, yes, that's great color.
And just as my final follow up.
And marine obviously, we've seen the dynamics that shift quite significantly over the last year, obviously with the pickup in emerge and helping to <unk> 'twenty.
But maybe if you can just give some color on that gross profit per metric ton kind of dynamic I mean, obviously we're.
We're seeing some strength and containers you mentioned some.
And the outside strength and but can you just maybe talk through how that.
How about business mix is changing and how that gross profit per metric ton can potentially improve sequentially from here.
Yes, we are.
We have historically traded and.
A fairly wide range in terms of gross profit per ton this quarter I would say we come in.
Closer to the historical low low end of the range of course, the early part of last year, we were way beyond the high end of the range because of the volatility caused by the IMO shift last January.
<unk>.
1 of the reasons, why we are and that lower and the range.
Is.
And there is certain activities that still haven't come back.
Such as crews.
And also.
This quarter with.
Extremely limited volatility.
And we often make incremental margin.
And on the on the risk management side, where customers are locking in.
On a forward basis, so youre not seeing.
A whole lot of that activity in this environment.
So as you look to the future the opportunities would come from heightened volatility, which would improve that piece.
Piece of the business a rebound in.
For a market like cruise and hopefully again if.
If everything and the world starts to improve.
And we've got our friends and the cruise business are all headquartered within about a 5 minute walk from our office. So we know them very well and hopefully they're going to start seeing more.
As we head towards the holidays and into and into next year.
And what's also cool is when you talk about connect and sustainability.
A lot of other marine customers.
Our are focused on being more carbon.
Friendly and often look to us for solutions and.
Addition to buying bunker fuel from us too to operate there.
Their ships and around the world. So that type of activity is picking up as well and could contribute to marine profitability.
Going forward.
Activity.
And it's Marines and tough 1.
Competitive marketplace.
<unk> cheap theres a lot of people going.
And after the same customers, but we still have a leadership position.
Around the world.
And relationships that date back decades.
And we will continue.
And to look to capitalize on those on those relationships and.
And.
Increased profitability, but the margin per ton metric is dependent upon a lot of the factors that I described below so that'll.
And that has tended to bounce around over the years price as a factor as well.
So for for the foreseeable future, we think second quarter.
Profit per ton is probably a reasonable metric to assume.
For for the balance of this year, but that could change based on a.
A lot of different factors and of course, we're trying to achieve the highest.
No.
The highest possible returns for that business.
Patrick Thanks, guys really appreciate it.
Yes.
Mr comes from bar there are no further questions at this time I will now turn the call back to you for closing remarks.
And thanks to everyone.
And listen to our update.
We feel we're well positioned to engaged and continuing opening of the markets and the transition that.
We're in the midst hub. So we look forward to updating you on the next quarter and stay safe and let's hope.
And that more people will get back to <unk>.
And so that.
We can continue to.
And to get back to.
1 of <unk>, so take care and stay safe and we look forward to updating you next quarter.
Ladies and gentlemen that does conclude the conference.
Today, we thank you for your participation and ask that you. Please disconnect your lines.
Thanks.
And then.
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Call for.
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