Q4 2024 World Kinect Corp Earnings Call
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Speaker Change: Good evening, everyone and welcome to World connects fourth quarter 2024 earnings conference call, which will be presented alongside our live slide presentation.
Speaker Change: Today's presentation is also available via webcast on our Investor Relations website I'm, Brian Macdonald Senior director of a PMA in Investor Relations with me on the call today is Michael <unk>, Chairman and Chief Executive Officer, and IRA Birns Executive Vice President and Chief Financial Officer and now.
Speaker Change: I'd like to review, our Safe Harbor statement certain statements made today, including comments about our expectations regarding future plans and performance are forward looking statements that are subject to a range of uncertainties and risks that could cause actual results to materially differ factors that could cause results to materially differ can be found in <unk>.
Speaker Change: Our most recent Form 10-K, and other reports filed with it with the Securities and Exchange Commission, we assume 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 a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures is included in our press release and can be found on our website. We will begin with several minutes of prepared remarks, which will that'd be followed by a question and answer period at this time I would like to introduce our <unk>.
Michael Caspar: Chairman and Chief Executive Officer, Michael Caspar.
Thank you Brian.
Good evening, everyone and thank you for taking the time to attend our call today.
Michael Caspar: As I look back on 2024, I am pleased to report that as a result of our focus on efficient capital allocation combined with our focus on driving operational efficiencies, we are making good progress towards our medium term financial targets. Our efforts are clearly beginning to bear fruit.
Michael Caspar: Further evidenced by the strong cash flow generation of fourth quarter, and the full year and consistent with the cash flow target, we shared at our Investor Day last March.
Michael Caspar: This enabled us to repurchase $100 million of shares during the year nearly double the amount repurchased in 2023 IRA will elaborate but this demonstrates our commitment to enhancing shareholder returns.
Michael Caspar: Our aviation business delivered impressive results in the fourth quarter capitalizing on favorable market conditions in both our commercial resale in business and general aviation activities, while our marine business performed in line with expectations given the current market environment.
Michael Caspar: The land segment delivered solid results in the fourth quarter and its strongest quarterly operating margin for the year. We firmly believe this trend will continue over the course of 2025 as we make steady progress in consolidating our portfolio of activities and standardizing, our north American liquid land operations.
Michael Caspar: Onto a unified technology and operating platform, enabling the cost reduction and higher asset utilization necessary to further improve operating leverage.
Michael Caspar: As I stated at our Investor Day last March This initiative mirrors. The Formula we have followed in our aviation marine businesses over the years, we are confident it will drive greater scalability and financial and commercial impact in U S land in 2025 and beyond.
Michael Caspar: One of the key actions we took during the fourth quarter was the divestiture of our business in Brazil. As previously reported this business had been a source of significant earnings volatility was underperforming and once you're increasingly disadvantaged by unfavorable local and macroeconomic trends.
Michael Caspar: This move aligns with our strategy to streamline our land operations. We are committed to continuing this approach into 2025 shedding additional underperforming activities as necessary and reallocating capital to improve financial returns.
Michael Caspar: Our acquisition pipeline is expanding across various sectors of our core business. These opportunities offers significant growth potential, but we will remain disciplined investing only where it makes strategic sense working to ensure that our investments enable or accelerate growth, while leveraging and complementing our existing.
Michael Caspar: <unk> platform.
Michael Caspar: The good news is that our strong cash flow and solid balance sheet provides us with ample financial resources to pursue and capitalize on the opportunities available in the market today.
Michael Caspar: So in closing we have created positive momentum heading into 2025 by focusing on efficient last half mile energy distribution solutions to aviation Marine and land based end users and markets that suit us I look forward to sharing more details over the balance of.
Ira Birns: The year I'll now turn the call over to IRA for a financial review.
Ira Birns: Thank you Michael and good evening everyone.
Ira Birns: Unfortunately, I have a lot to say on this call being a year end covering the quarter and the full year.
Speaker Change: Before we begin please note that our non-GAAP results reflects several adjustments this quarter to our GAAP results reconciliations are as always on our Investor Relations website and also in today's webcast presentation.
Speaker Change: There were several non-GAAP adjustments in the fourth quarter, which totaled $143 million or $138 million after tax.
Speaker Change: Largest of these non-GAAP adjustments relates to the sale of our operations in Brazil that Mike just referred to as.
Speaker Change: As part of our ongoing efforts to sharpen our portfolio of business activities. We made the decision to sell this business during the fourth quarter completing the sale in December.
Speaker Change: The recent underperformance in significant complexities associated with operating this business led us to explore an exit strategy, which we were able to execute on quickly.
Speaker Change: This decision supports our ongoing priority of driving improved performance in our land business by continuing to narrow our focus to areas with the greatest opportunities for growth and operational efficiencies. It is also aligned with our goal to achieve our medium term targets, most specifically for operating margin and free cash flow.
Speaker Change: This sale did result in a onetime noncash pre tax charge of approximately $111 million.
Speaker Change: However, the related balance sheet impact was minimal as a significant portion of this charge approximately $80 million relates to cumulative unrealized foreign currency translation losses previously recorded within shareholders' equity.
Additionally, our fourth quarter non-GAAP adjustments also included approximately $9 million of costs associated with exiting certain north American land business activities, which life, Brazil, we're underperforming further contributing to further improvements in our broader land businesses.
Speaker Change: Performance sorry.
Speaker Change: Looking ahead, we see additional opportunities to further refine and improve our land portfolio with growth coming from a combination of organic opportunities and strategic investors, but also from continued focus on shedding or restructuring underperforming business activities. This should continue to simplify and strengthen the land business narratives.
Speaker Change: Enabling us to achieve our medium term targets and drive increased shareholder value stay tuned for more updates over the next few quarters.
Speaker Change: The balance of the fourth quarter non-GAAP adjustments approximately $22 million principally related to an impairment of a minority equity investment in a non core business activity.
Speaker Change: Now, let's turn to our fourth quarter and full year operating results and again as a reminder, these results exclude the impact of all of the non-GAAP adjustments I just reviewed.
Speaker Change: On a consolidated basis, our fourth quarter total volume was $4 5 billion gallons down 1% year over year and our full year volume of $17 7 billion was down approximately 2%.
Speaker Change: Consolidated adjusted gross profit declined 8% from last year's fourth quarter to $259 million, which was near the top of the guidance range, we provided last quarter the.
Speaker Change: The year over year decline was primarily due to lower gross profit in aviation impacted in part by the Avenue sale earlier last year as well as marine in our land segment was effectively flat year over year.
Speaker Change: <unk> adjusted gross profit was $1 <unk> 3 billion for the full year down 7% from 2023.
Speaker Change: This is primarily driven by year over year gross profit declines in our marine and land businesses of nine and 14%, respectively and again the sale of Avenova in aviation, partially offset by increased gross profit in our core aviation business activities.
Speaker Change: Now some additional detail segment by segment for both the quarter and the full year 2004 to help explain the year over year movements.
Speaker Change: First aviation in the fourth quarter, our aviation volume was $1 8 billion gallons up 4% year over year, principally driven by core aviation business activity for the full year aviation volume of seven 3 billion was down 1% year over year impacted by our decision to exit certain low margin.
Speaker Change: Fuel business during the fourth quarter of 2023.
Speaker Change: If you exclude the impact of exiting this particular activity 2284 volume was up approximately 4% year over year.
Speaker Change: In the fourth quarter aviation gross profit was $120 million, a decrease of $11 million or 8% year over year and once again. This decrease is attributable to the sale of Avenue during the second quarter of 2004, as well as lower inventory related profitability year over year. This was all partially offset by growth in.
Speaker Change: Our core commercial resale activities in our business and general aviation activities for the full year aviation gross profit was $486 million effectively flat year over year, while we delivered growth in our core commercial resale business. This was generally offset by the impact of the <unk> sale.
Speaker Change: As we look to the first quarter aviation results should experience a traditional seasonal decline from the fourth quarter and we expect a year over year decrease in gross profit again, principally related to the <unk> exit early last year.
Speaker Change: On to land in the fourth quarter land volumes decreased 5% year over year, principally driven by decreases in our north American wholesale and retail business activities.
Speaker Change: Gas and power of volumes represented 40% of our total volume in the fourth quarter up from 37% in the fourth quarter of 2023 and for the full year. Our overall land volume was $6 1 billion, that's down 3% year over year in.
Speaker Change: In the fourth quarter land adjusted gross profit was $104 million, which was effectively flat compared to 2023.
Speaker Change: For the full year land adjusted gross profit was $384 million that was down 14% year over year, primarily attributable to unfavorable market conditions in Brazil, and the U K lower profit contributions from our natural gas and power businesses as a result of lower market prices and volatility and reduced profitability.
Speaker Change: From our sustainability related offerings as we look to the first quarter, we expect land gross profit to be up year over year with more significant improvement in profitability expected as the year progresses.
Speaker Change: In the fourth quarter Marine volumes were down 4% year over year, and they were down 2% year over year for the full year 2024.
Speaker Change: Fourth quarter Marine gross profit decreased approximately 22% year over year and for the full year Marine gross profit was down 9% year over year the year over year declines in gross profit were principally driven by lower bunker fuel prices and reduced market volatility.
Speaker Change: As we look to the first quarter, we expect marine gross profit to be down year over year for effectively the same reasons, but as the year progresses, we should begin to see the marine year over year comparisons normalize as market conditions and prices began softening in the second quarter of 2024.
On a consolidated basis as we look towards the first quarter with the backdrop of the related segment gross profit comments I just shared we expect consolidated gross profit to be in the range of $234 million to $241 million.
Speaker Change: Now, let's talk about expenses adjusted consolidated operating expenses were $197 million in the fourth quarter, that's down 5% year over year and consistent with the guidance provided last quarter.
Speaker Change: For the full year adjusted operating expenses were $773 million, that's down about 6% from $819 million in 2023.
Speaker Change: While our operating margin did not improved year over year actions already taken during 2024, including the sale of Brazil, and exiting certain north American land business activities have already improved our run rate operating margin as we have kicked off 2025.
Speaker Change: Speaking of <unk> 25 for the first quarter, we are expecting adjusted operating expenses of $179 million to $184 million. A further decline from the fourth quarter and a decline of 4% year over year impacted in part by discontinued business activities, but also our continued focus on driving operating efficiencies occur.
Speaker Change: The entire business.
Speaker Change: For the full year 'twenty five we are expecting another year over year decline in adjusted operating expenses similar to the decline experienced in 2024.
Speaker Change: Again, we remain focused on driving greater operating efficiencies in our overall business, which may include restructuring activities or exiting other underperforming non core business activities, while driving improved efficiencies in our core activities, which are performing well.
Speaker Change: This focus together with actions already taken should enable us to achieve year over year improvement in our operating margin and 25, making good progress towards our medium term, 30% operating margin target.
Speaker Change: We generated $361 million of adjusted EBITDA in 2024, while we clearly have progress to make to achieve our medium term EBITDA target shared at last year's Investor Day.
Speaker Change: Sitting underperforming business activities driving broader operating efficiency efficiencies in our core businesses and maintaining our solid cash flow profile and strong balance sheet, which should enable us to tap into a growing pipeline of strategic investment opportunities that Mike referred to should provide us with growing momentum and support.
Speaker Change: This medium term target.
Interest expense was $22 million in the fourth quarter down approximately 33% year over year and below the guidance provided last quarter.
Speaker Change: <unk> full year 2024 interest expense was approximately 20% down from 2023.
Speaker Change: For the first quarter of 'twenty five we expect interest expense to be in the range of $22 million to $23 million.
Speaker Change: Our adjusted effective tax rate for the fourth quarter was 12%. This was positively impacted by a discrete tax benefit during the quarter, resulting in a full year 2024, adjusted effective tax rate of just under 15% a few percent lower than anticipated heading into the fourth quarter.
Speaker Change: It is clear that our 2024 tax rate will be difficult to replicate in 2025. So based upon what we know today, we expect our adjusted effective tax rate for the full year 25 to be somewhere in the range of 22% to 25%.
Speaker Change: Rebounding from using cash in the third quarter during the fourth quarter, we actually generated operating cash flow of $120 million and free cash flow of $102 million, resulting in $260 million of operating cash flow and $192 million of free cash flow for the full year while in.
Speaker Change: Aligned with our longer term cash flow target.
Speaker Change: Over the past three years, we have now generated approximately $435 million of free cash flow and we remain focused on continuing to drive strong cash flow results and improving shareholder returns.
Speaker Change: These strong cash flows have enabled us to continue returning value to our shareholders through buybacks and dividends.
Speaker Change: During the fourth quarter, we repurchased an additional $43 million of shares increasing total full year repurchases to $100 million or $3 6 million shares for the full year total capital allocated to share repurchases and dividends was $139 million.
Speaker Change: Getting a 47% increase year over year and.
Speaker Change: And over the past three years, we have now returned $312 million to shareholders through buybacks and dividends, representing 72% of the free cash flow generated during this period again, demonstrating our continuing commitment to enhancing shareholder returns.
Speaker Change: In closing I want to leave you with a few thoughts.
Speaker Change: Aviation delivered solid year over year results driven by strong performance in our core commercial business and the sale of Avenova earlier in the year enabled us to free up capital to reinvest in our core business activities.
Speaker Change: While our land segment experienced weakness in the first half of the year land rebounded nicely in the second half with a fourth quarter operating margin showing significant improvement from earlier in 'twenty four.
Speaker Change: Additionally, we divested our Brazilian operations and exited certain land activities in North America as part of our continuing effort to sharpen our portfolio of business activities and simplified the land segment story, while also improving our overall returns.
Marine was impacted by declining bunker fuel prices and market volatility, but continues to maintain an efficient operating model providing opportunities for increased profitability and cash flow when market conditions improve.
Speaker Change: For the full year again, we returned approximately $139 million to shareholders through repurchases and dividends, we repurchased more shares than we have historically repurchased on our annual basis. During 'twenty four and we also increased our dividend by 21% during the year evidence of our increased confidence in our cash flow generation and improving dynamic.
Speaker Change: And returns and our broader business and.
Speaker Change: And we remain dedicated to our medium term goals, taking strategic actions to position the business for future growth, while also driving improvements in operating efficiencies and.
Speaker Change: In closing I want to express my appreciation to our employees across the globe for their hard work and commitment to world connect throughout the year their dedication to our suppliers customers and to each other is truly invaluable to us as we look to the future.
Speaker Change: Thank you and I will now turn the call back to our operator Latif to open the Q&A session.
Thank you as a reminder to ask a question you will need to press star one one on your telephone to remove yourself from the queue. You May Press Star one one again please.
Speaker Change: Please standby, while we compile the Q&A roster.
Speaker Change: Our first question.
Speaker Change: It comes from the line of Ken <unk> Bofa. Your line is open.
Ira Birns: Great Good afternoon IRA and.
Speaker Change: Michael.
Speaker Change: I guess, maybe just thinking into that.
Speaker Change: Brazil.
Speaker Change: Sale and you have certain north American businesses, maybe describe a little bit about what was shed. How you think about further refinement you talked about maybe the potential to see what what you can still do as you go through the businesses and maybe the scale of what was sold and what's on the block or what could be on the block as you.
Speaker Change: You move forward to continue to refine those ops. Thanks.
Speaker Change: Sure. Thanks for the question, Ken So Brazil was relatively small part of the land business, but as we've mentioned in the last couple of quarters. It had a fair amount of volatility associated with it and see.
Speaker Change: Started generating losses to be honest, we've talked about the the Russian cargoes and our inability to compete with local Brazilian.
Speaker Change: Competitors that were able to take advantage of things like that.
Speaker Change: And it's just a a higher risk environments operate and so we found the opportunity to.
Speaker Change: Get out relatively quickly we got some cash out of that it wasn't a massive.
Speaker Change: The amount of money and it doesn't really have much of an impact on I mean literally the gross profit generated that business was close to <unk> was close to zero.
Speaker Change: We of course have some expenses below that line.
Speaker Change: So that that's the Brazilian piece.
Speaker Change: In the U S. We had we had a business that had had some components to what they were in core. One example of that would be.
Speaker Change: Heating oil business that wasn't performing very well and probably had.
Speaker Change: Probably had.
Speaker Change: Just an overall.
Speaker Change: Inefficient structures to be able to restructure that business getting out get out of the heating oil piece of the puzzle.
Speaker Change: Get some assets reduce.
Speaker Change: The number of employees needed to participate in that business and that that takes that particular activity from <unk>.
Speaker Change: Instantly to losing a few million dollars a year to making several million dollars a year. So both combined moves are clearly accretive.
Speaker Change: <unk> 25 versus <unk> 24.
Speaker Change: What's left.
Speaker Change: The good news is.
Speaker Change: We're getting there right, we're starting to read through.
Speaker Change: Just about all the pieces of the pie that really don't make long term sense is probably one or two more I think we're trying to narrow our focus in land to our core activities in North America, where we have.
Speaker Change: Growing.
Speaker Change: Capabilities from a platform perspective and scale.
Which we don't have in other parts of the world. So that's where we're focused on driving efficiencies in Brazil was one international piece of the pie, we still have some other activity outside of the U S.
Speaker Change: And I think over the next several months will will tell the rest of the rest of that story.
Speaker Change: And that all of that helps smooth land in the direction that we talked about at Investor day, which helps our overall consolidated story and things like our operating margin target and just overall returns because there is a fair amount of capital employed and some of these businesses that we've now freed up.
Speaker Change: So all in line with what we've been talking about over the last several quarters. So can I get back to that can we put a number on it in terms of gross revenue scale or.
Speaker Change: It sounds like gross profit was nothing on Brazil, but.
Speaker Change: This scale of Brazil, and the U S components that were shut in.
Speaker Change: And maybe one dollar size of kind of just percentage of revenues you can look to shed going forward.
Speaker Change: Yes.
Speaker Change: Revenue shedding is an immaterial number again in Brazil.
Speaker Change: Net revenue was literally zero, so we werent generating any any gross profit and we had call it $6 million to $7 million of expenses, so very small.
Speaker Change: The business in the U S.
Speaker Change: It's also a very small amount of revenue that was more shedding expenses than actual revenue.
Speaker Change: So.
Speaker Change: They're rounding errors for Europe to be honest from a modeling perspective, but they're they're incident improvement because we're taking out expenses with giving up next to next to no revenue.
Speaker Change: And you're saying, there's maybe one or two other opportunities like that.
Speaker Change: To pull out cost outpaced revenue.
Speaker Change: We still have some opportunities to the other opportunities may involve taking out some revenue, but likely taking out an equal amount of costs. So net net.
Speaker Change: Businesses that may not be generating with profitability that are weighing down our our operating margins and our returns because they're not really making much of a contribution fewer of those left but theres still a couple of opportunities like that.
We're looking at.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Yes my following.
Speaker Change: The comment.
Speaker Change: Last quarter.
Speaker Change: The U S is the focus right large market.
Speaker Change: The largest energy market in the world I'm still pretty pretty sure of that.
Speaker Change: And then of course, we've got our sustainability business.
Speaker Change: Which natural gas and power, but the focus is really the U S steps.
Speaker Change: A big target for us in optimizing that so that's the name of the game.
Speaker Change: <unk>.
Speaker Change: In the go forward land portfolio.
Speaker Change: The sustainability business.
Speaker Change: Got its ups and downs, but.
Speaker Change: We've got a runway to.
Speaker Change: Primary focus is U S gasoline.
Speaker Change: Diesel business, we operate the largest card lock networks in the U S.
Speaker Change: So that's going to be I think a bit.
Speaker Change: Sure.
Speaker Change: Four.
Speaker Change: A clear and a simpler story base.
Speaker Change: Basically discuss on a go forward basis.
Speaker Change: Wonderful.
Speaker Change: I right if I could just follow up on one of the business lines on the metric gross profit per metric ton it.
Speaker Change: It seems really volatile lately right you've gone down to two.
Speaker Change: Hello.
Speaker Change: 34.
Speaker Change: Down 19% year over year after being up 10% in the third quarter down 13% in the second quarter.
Speaker Change: Maybe just delve into what's going on in marine in terms of obviously, we know the volatility in the shipping lanes, but what's going on with your business.
Speaker Change: It was the margin in marine is always heavily dependent on volatility in pricing is pricing as pricing has softened we naturally have a tendency to see margins come down to that I think the team has actually done a very good job glass half full and maintaining margins that are higher than historical levels relative to the current <unk>.
Speaker Change: This environment, but there's still down compared to where we were.
Speaker Change: A year ago right, we started seeing that softening in the second quarter of last year. So what I was what I was thinking too earlier as we get into the second and third quarters the year over year comparisons.
Speaker Change: Should be somewhat similar pricing and volatility levels stay in these levels, but we have still been through the first quarter dealing with year over year comparisons to higher prices and higher volatility.
Speaker Change: So yes.
Speaker Change: You haven't seen.
Speaker Change: Obviously since.
Speaker Change: These numbers are in dollars as opposed to pennies.
Speaker Change: Those moves.
Speaker Change: And to look a bit more meaningful but they have been trading at a pretty in a pretty tight band relative to the underlying.
Speaker Change: Commodity price.
Speaker Change: Great and last one for me just on aviation you showed some some growth is that.
Speaker Change: International.
Speaker Change: Air freight growth.
Speaker Change: It's tied to is there something domestic increased contracts just trying to wonder a little bit different than what we are seeing economically a little bit stronger at three 5% up year over year in the fourth quarter.
Speaker Change: On the gallons I know you've got to have a note and everything out of there, but just wondering what what's driving the volume side.
Speaker Change: You hit on it in your first couple of words most of the improvement was actually overseas in Europe, and Asia Asia was always the slowest to come back over the last few years. So we saw some improvement there in Europe was pretty strong as well so most of that.
Speaker Change: Moreover, outside of the U S.
Is that tied to the de minimus or is that just.
Speaker Change: More consumer growth.
Speaker Change: Commercial commercial passenger growth principally okay.
Speaker Change: Great. Thank you very much appreciate the time.
Speaker Change: Thanks, Ken.
Speaker Change: Thank you once again to ask a question press star one on your telephone at Star one what.
Speaker Change: Our next question.
Speaker Change: Comes from the line of John Real quick.
Speaker Change: J P. Morgan. Please go ahead John.
Hi, good evening, thanks for taking my questions.
Speaker Change: My first question is on returns to shareholders and the buyback is kind of a flywheel there.
Speaker Change: Are you comfortable in that 70%, 75% range of free cash flow payout. This year can you do that level of returns and also preserve the dry powder that you might need for some of the acquisitions that Michael discussed in his opening.
Speaker Change: So thanks for joining US again, John Great question, obviously, the 72% number is on the higher end of historical ranges for us.
Speaker Change: It was a year, where we had solid cash flow only made one small acquisition. So it enabled us to be a bit more aggressive in terms of the total capital that we were able to use for buybacks and dividends I wouldn't guarantee that we will always spent 72% I think at Investor day, we set a longer term target was around 40.
Speaker Change: There will be years, like 24, where we will be able to do and want to do more than that and there will be years, where the number will be closer to 40.
Speaker Change: So.
Speaker Change: I, probably can't give you a answer much much better than that but kind of the stars were in alignment this year because of our cash flow and the fact that we.
Speaker Change: We didn't we saw prices come down our working capital actually came down during the year contributing to that.
Speaker Change: That cash flow production.
Speaker Change: So it just gave us more free powder more dry powder to to.
Speaker Change: To make those investments and acquisition values, we thought Brian it's in rates right.
Speaker Change: And buybacks are easier to integrate the acquired companies.
Speaker Change: So the reason we did it.
Speaker Change: Understood. Thank you and then.
Speaker Change: Maybe just a follow up on the land segment.
Speaker Change: Could you break down a little bit.
Speaker Change: Any of the components of the year over year.
Speaker Change: Gross profit growth.
Speaker Change: And when that you expected in <unk>.
Speaker Change: It sounds like maybe some of the North America exits were actually loss, making on the gross profit side. So maybe there is some of it is just from exiting those but I'm just trying to understand the high level drivers of the improvement in <unk> organically market, driven and any impact from those exits.
Speaker Change: Yes, we don't expect substantial increase year over year, but the improvements anticipated in the core so I would say that would principally be our card lock and retail businesses in North America.
Speaker Change: Where we expect a bit of improvement, obviously, brazil's out, but thats not really going to move the needle because that number was zero with the gross profit line.
Speaker Change: And.
Speaker Change: Expecting a little bit of improvement in.
Speaker Change: On the Nat gas side of the equation as well on a year over year basis.
Speaker Change: Thank you.
Thank you I would now like to turn the conference back to Michael <unk> for closing remarks, Sir.
Speaker Change: Okay, well, thanks, very much for joining us.
Speaker Change: And.
Speaker Change: Thanks to our global team, we've got we've got the best Global team and the business was burning desire to serve our customers suppliers and partners around the clock and it's a pleasure to serve with you. So thanks, everybody and look forward to talking to you next quarter.
Speaker Change: Bye bye for now.
Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.
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Speaker Change: Good evening, everyone and welcome to World connects fourth quarter 2024 earnings conference call, which will be presented alongside our live slide presentation.
Speaker Change: Today's presentation is also available via webcast on our Investor Relations website.
Bryan Mcdonald: Bryan Mcdonald senior director of a PMA in Investor Relations with me on the call today is Michael <unk>, Chairman and Chief Executive Officer, and IRA Birns Executive Vice President and Chief Financial Officer.
Speaker Change: And now I'd like to review, our Safe Harbor statement certain statements made today, including comments about our expectations regarding future plans and performance are forward looking statements that are subject to a range of uncertainties and risks that could cause actual results to materially differ factors that could cause results to materially differ can be found.
Speaker Change: And our most recent Form 10-K, and other reports filed with it with the Securities and Exchange Commission, we assume 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.
Speaker Change: non-GAAP financial measures a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures is included in our press release and can be found on our website. We will begin with several minutes of prepared remarks, which will that'd be followed by a question and answer period at this time I would like to introduce.
Speaker Change: Our chairman and Chief Executive Officer, Michael Caspar.
Speaker Change: Good evening, everyone and thank you for taking the time to attend our call today.
Speaker Change: As I look back on 2024, I am pleased to report that as a result of our focus on efficient capital allocation combined with our focus on driving operational efficiencies, we are making good progress towards our medium term financial targets.
Our efforts are clearly beginning to bear fruit further evidenced by the strong cash flow generation in the fourth quarter and the full year and consistent with the cash flow target, we shared at our Investor Day last March.
Ira Birns: This enabled us to repurchase $100 million of shares during the year nearly double the amount repurchased in 2023 IRA will elaborate but this demonstrates our commitment to enhancing shareholder returns.
Ira Birns: I radiation business delivered impressive results in the fourth quarter capitalizing on favorable market conditions in both our commercial resale and business in general aviation activities, while our marine business performed in line with expectations given the current market environment.
Ira Birns: The land segment delivered solid results in the fourth quarter and its strongest quarterly operating margins for the year. We firmly believe this trend will continue over the course of 2025 as we make steady progress in consolidating our portfolio of activities and standardizing, our north American liquid land operations.
Ira Birns: Onto a unified technology and operating platform, enabling the cost reduction and higher asset utilization necessary to further improve operating leverage.
Ira Birns: As I stated at our Investor Day last March this initiatives mirrors. The formula we have followed in our aviation marine businesses over the years, we are confident it will drive greater scalability and financial and commercial impact in the U S land in 2025 and beyond.
One of the key actions we took during the fourth quarter was the divestiture of our business in Brazil. As previously reported this business had been a source of significant earnings volatility was underperforming and once increasingly disadvantaged by unfavorable local and macroeconomic trends this move.
Ira Birns: The alliance with our strategy to streamline our land operations. We are committed to continuing this approach into 2025 shedding additional underperforming activities as necessary and reallocating capital to improve financial returns.
Ira Birns: Our acquisition pipeline is expanding across various sectors of our core business. These opportunities offers significant growth potential, but we will remain disciplined investing only where it makes strategic sense working to ensure that our investments enable or accelerate growth, while leveraging and complementing our existing.
Ira Birns: Listing platform.
Ira Birns: The good news is that our strong cash flow and solid balance sheet provide us with ample financial resources to pursue and capitalize on the opportunities available in the market today.
Ira Birns: So in closing we have created positive momentum heading into 2025 by focusing on efficient last half mile energy distribution solutions to aviation Marine and land based end users and markets that suit us I look forward to sharing more details over the balance of.
Ira Birns: The year I'll now turn the call over to IRA for a financial review.
Ira Birns: Okay.
Ira Birns: Thank you Michael and good evening everyone.
Speaker Change: Unfortunately, I have a lot to say on this call being a year end covering the quarter and the full year.
Speaker Change: Before we begin please note that our non-GAAP results reflects several adjustments this quarter to our GAAP results reconciliations are as always on our Investor Relations website and also in today's webcast presentation.
Speaker Change: There were several non-GAAP adjustments in the fourth quarter, which totaled $143 million or $138 million after tax.
Speaker Change: The largest of these non-GAAP adjustments relates to the sale of our operations in Brazil that Mike just referred to.
Speaker Change: As part of our ongoing efforts to sharpen our portfolio of business activities. We made the decision to sell this business during the fourth quarter completing the sale in December.
Speaker Change: The recent underperformance in significant complexities associated with operating this business led us to explore an exit strategy, which we were able to execute on quickly.
Speaker Change: This decision supports our ongoing priority of driving improved performance of our land business by continuing to narrow our focus to areas with the greatest opportunities for growth and operational efficiencies. It is also aligned with our goal to achieve our medium term targets, most specifically for operating margin and free cash flow.
Speaker Change: This sale did result in a onetime noncash pre tax charge of approximately $111 million power.
Speaker Change: However, the related balance sheet impact was minimal as a significant portion of this charge of approximately $80 million relates to cumulative unrealized foreign currency translation losses previously recorded within shareholders' equity.
Speaker Change: Additionally, our fourth quarter non-GAAP adjustments also included approximately $9 million of costs associated with exiting certain north American land business activities, which like Brazil, We're underperforming further contributing to further improvements in our broader land businesses.
Speaker Change: Performance sorry.
Speaker Change: Looking ahead, we see additional opportunities to further refine and improve our land portfolio with growth coming from a combination of organic opportunities and strategic investments, but also from continued focus on shedding or restructuring underperforming business activities. This should continue to simplify and strengthen the land business narratives.
Speaker Change: Enabling us to achieve our medium term targets and drive increased shareholder value stay tuned for more updates over the next few quarters.
Speaker Change: The balance of the fourth quarter non-GAAP adjustments approximately $22 million principally related to an impairment of a minority equity investment in a non core business activity.
Speaker Change: Now, let's turn to our fourth quarter and full year operating results and again as a reminder, these results exclude the impact of all the non-GAAP adjustments I just reviewed.
Speaker Change: On a consolidated basis, our fourth quarter total volume was $4 5 billion gallons down 1% year over year and our full year volume volume of $17 7 billion was down approximately 2%.
Speaker Change: Consolidated adjusted gross profit declined 8% from last year's fourth quarter to $259 million, which was near the top of the guidance range, we provided last quarter the.
Speaker Change: The year over year decline was primarily due to lower gross profit in aviation impacted in part by the Avenue sale earlier last year as well as marine in our land segment was effectively flat year over year.
Speaker Change: <unk> adjusted gross profit was $1 3 billion for the full year down 7% from 2023.
Speaker Change: This is primarily driven by year over year gross profit declines in our marine and land businesses of nine and 14%, respectively and again the sale of Avenova in aviation, partially offset by increased gross profit in our core aviation business activities.
Speaker Change: Now some additional detail segment by segment for both the quarter and the full year 2004 to help explain the year over year movements.
Speaker Change: First aviation in the fourth quarter, our aviation volume was $1 8 billion gallons up 4% year over year, principally driven by core aviation business activity for the full year aviation volume of seven 3 billion was down 1% year over year impacted by our decision to exit certain low margin.
Speaker Change: <unk> fuel business during the fourth quarter of 2023.
Speaker Change: If you exclude the impact of exiting this particular activity 2284 volume was up approximately 4% year over year.
Speaker Change: In the fourth quarter aviation gross profit was $120 million, a decrease of $11 million or 8% year over year and once again. This decrease is attributable to the sale of Avenue during the second quarter of 'twenty, four as well as lower inventory related profitability year over year. This was all partially offset by growth in.
Our core commercial resale activities in our business in general aviation activities for the full year aviation gross profit was $486 million effectively flat year over year, while we delivered growth in our core commercial resale business. This was generally offset by the impact of the Avenova sale.
Speaker Change: As we look to the first quarter aviation results should experience the traditional seasonal decline from the fourth quarter and we expect a year over year decrease in gross profit again, principally related to the Avenue exit early last year.
Speaker Change: On to land in the fourth quarter land volumes decreased 5% year over year, principally driven by decreases in our north American wholesale and retail business activities.
Speaker Change: Gas and power of volumes represented 40% of our total volume in the fourth quarter up from 37% in the fourth quarter of 2023 and for the full year. Our overall land volume was $6 1 billion, that's down 3% year over year in.
Speaker Change: In the fourth quarter land adjusted gross profit was $104 million, which was effectively flat compared to 2023.
Speaker Change: For the full year land adjusted gross profit was $384 million that was down 14% year over year, primarily attributable to unfavorable market conditions in Brazil, and the U K lower profit contributions from our natural gas and power businesses as a result of lower market prices and volatility and reduced profitability.
Speaker Change: From our sustainability related offerings as we look to the first quarter, we expect land gross profit to be up year over year with more significant improvement in profitability expected as the year progresses.
Speaker Change: In the fourth quarter Marine volumes were down 4% year over year, and they were down 2% year over year for the full year 2024.
Speaker Change: Fourth quarter Marine gross profit decreased approximately 22% year over year and for the full year Marine gross profit was down 9% year over year the year over year declines in gross profit were principally driven by lower bunker fuel prices and reduced market volatility.
Speaker Change: As we look to the first quarter, we expect marine gross profit to be down year over year for effectively the same reasons, but as the year progresses, we should begin to see the marine year over year comparisons normalize as market conditions and prices began softening in the second quarter of 2024.
Speaker Change: On a consolidated basis as we look towards the first quarter with the backdrop of the related segment gross profit comments I just shared we expect consolidated gross profit to be in the range of $234 million to $241 million.
Speaker Change: Now, let's talk about expenses adjusted consolidated operating expenses were $197 million in the fourth quarter, that's down 5% year over year and consistent with the guidance provided last quarter for the full year adjusted operating expenses were $773 million, that's down about 6% from 800.
Speaker Change: $19 million in 2023.
Speaker Change: While our operating margin did not improve year over year actions already taken during 2024, including the sale of Brazil, and exiting certain north American land business activities have already improved our run rate operating margin as we have kicked off 2025.
Speaker Change: Speaking of 25 for the first quarter, we are expecting adjusted operating expenses of $179 million to $184 million. A further decline from the fourth quarter and a decline of 4% year over year impacted in part by discontinued business activities, but also our continued focus on driving operating efficiencies.
Across the entire business.
Speaker Change: For the full year 'twenty five we are expecting another year over year decline in adjusted operating expenses similar to the decline experienced in 2024.
Speaker Change: Again, we remain focused on driving greater operating efficiencies in our overall business, which may include restructuring activities or exiting other underperforming noncore business activities, while driving improved efficiencies in our core activities, which are performing well.
Speaker Change: This focus together with actions already taken should enable us to achieve year over year improvement in our operating margin and 25, making good progress towards our medium term, 30% operating margin target.
Speaker Change: We generated $361 million of adjusted EBITDA in 2024, while we clearly have progress to make to achieve our medium term EBITDA target shared at last year's Investor Day.
Michael Caspar: <unk> underperforming business activities driving broader operating efficiency efficiencies in our core businesses and maintaining our solid cash flow profile and strong balance sheet, which should enable us to tap into a growing pipeline of strategic investment opportunities that Mike referred to should provide us with growing momentum and support.
Speaker Change: Of this medium term target.
Speaker Change: Interest expense was $22 million in the fourth quarter down approximately 33% year over year and below the guidance provided last quarter.
Speaker Change: Full year 2024 interest expense was approximately 20% down from 2023.
Speaker Change: For the first quarter of 'twenty five we expect interest expense to be in the range of $22 million to $23 million.
Speaker Change: Our adjusted effective tax rate for the fourth quarter was 12%. This was positively impacted by a discrete tax benefit during the quarter, resulting in a full year of 2024 adjusted effective tax rate of just under 15% a few percent lower than anticipated heading into the fourth quarter.
Speaker Change: It is clear that our 2024 tax rate will be difficult to replicate in 2025. So based upon what we know today, we expect our adjusted effective tax rate for the full year 25 to be somewhere in the range of 22% to 25%.
Speaker Change: Rebounding from using cash in the third quarter during the fourth quarter, we actually generated operating cash flow of $120 million and free cash flow of $102 million, resulting in $260 million of operating cash flow and $192 million of free cash flow for the full year while in la.
Speaker Change: With our longer term cash flow target.
Speaker Change: Over the past three years, we have now generated approximately $435 million of free cash flow and we remain focused on continuing to drive strong cash flow results and improving shareholder returns.
Speaker Change: These strong cash flows have enabled us to continue returning value to our shareholders through buybacks and dividends during the fourth quarter, we repurchased an additional $43 million of shares increasing total full year repurchases to $100 million or.
Speaker Change: Or $3 6 million shares for the full year total capital allocated to share repurchases and dividends was $139 million.
Speaker Change: Representing a 47% increase year over year.
Speaker Change: And over the past three years, we have now returned $312 million to shareholders through buybacks and dividends, representing 72% of the free cash flow generated during this period again, demonstrating our continuing commitment to enhancing shareholder returns.
Speaker Change: In closing I want to leave you with a few thoughts.
Speaker Change: Aviation delivered solid year over year results driven by strong performance in our core commercial business and the sale of Avenova earlier in the year enabled us to free up capital to reinvest in our core business activities while.
Speaker Change: While our land segment experienced weakness in the first half of the year land rebounded nicely in the second half with the fourth quarter operating margin showing significant improvement from earlier in 'twenty four.
Additionally, we divested our Brazilian operations and exited certain land activities in North America as part of our continuing effort to sharpen our portfolio of business activities and simplified the land segment story, while also improving our overall returns.
Speaker Change: <unk> was impacted by declining bunker fuel prices and market volatility, but continues to maintain an efficient operating model providing opportunities for increased profitability and cash flow when market conditions improve.
Speaker Change: For the full year again, we returned approximately $139 million to shareholders through repurchases and dividends, we repurchased more shares than we have historically repurchased on our annual basis. During 'twenty four and we also increased our dividend by 21% during the year evidence of our increased confidence in our cash flow generation and improving dynamics.
Speaker Change: And returns and our broader business.
Speaker Change: And we remain dedicated to our medium term goals, taking strategic actions to position the business for future growth, while also driving improvements in operating efficiencies.
Speaker Change: In closing I want to express my appreciation to our employees across the globe for their hard work and commitment to world connect throughout the year their dedication to our suppliers customers and to each other is truly invaluable to us as we look to the future.
Speaker Change: Thank you and I will now turn the call back to our operator Latif to open the Q&A session.
Latif: Thank you as a reminder to ask a question you will need to press star one one on your telephone to remove yourself from the queue. You May Press Star one one again please.
Latif: Please standby, while we compile the Q&A roster.
Latif: Our first question.
Speaker Change: It comes from the line of Ken <unk> Bofa. Your line is open again.
Ira Birns: Great Good afternoon IRA and.
Speaker Change: Michael.
Speaker Change: I guess, maybe just thinking into that step.
Speaker Change: Brazil.
Speaker Change: Sale and you have certain north American businesses, maybe describe a little bit about what was shed how are you.
Speaker Change: You think about further refinement you talked about maybe the potential to see what what you can still do as you go through the businesses and maybe the scale of what was sold and what's on the block or what could be on the block as you move forward to continue to refine those ops.
Speaker Change: Sure. Thanks for the question, Ken So Brazil was relatively small part of the land business, but as we've mentioned in the last couple of quarters. It had a fair amount of volatility associated with it and.
Speaker Change: Started generating losses to be honest, we talked about.
Speaker Change: The Russian cargoes and our inability to compete with local Brazilian.
Speaker Change: The competitors that we're able to take advantage of things like that and it's just a a higher risk environments operate and so we found the opportunity to.
Speaker Change: Get out relatively quickly we got some cash out of that it wasn't a massive.
Speaker Change: Out of money.
Speaker Change: Doesn't really have much of an impact on I mean literally the gross profit generated that business was close to <unk> was close to zero.
Speaker Change: And we of course have some expenses below that line.
Speaker Change: So that that's the Brazilian piece in.
Speaker Change: In the U S. We had we had a business that had had some components to what they were in core. One example of that would be.
Speaker Change: Heating oil business that wasn't performing very well and probably had with Bob.
Speaker Change: Probably had.
Speaker Change: Just an overall.
Speaker Change: Inefficient structures to be able to restructure that business getting out get out of the heating oil piece of the puzzle yet.
Get some assets reduce.
Speaker Change: The number of employees needed to participate in that business and that that takes that particular activity from <unk>.
Speaker Change: Instantly to losing a few million dollars a year to making several million dollars a year. So those combined moves are clearly accretive.
Speaker Change: <unk> 25 versus <unk> 24.
Speaker Change: What's left.
The good news is.
Speaker Change: We're getting there right, we're starting to read through.
Speaker Change: Just about all of the pieces of the pie that really don't make long term sense is probably one or two more I think we're trying to narrow our focus in land to our core activities in North America, where we have.
Speaker Change: Growing.
Speaker Change: Capabilities from a platform perspective and scale.
Speaker Change: And which we don't have in other parts of the world. So that's where we're focused on driving efficiencies in Brazil was one international piece of the pie, we still have some other activity outside of the U S.
Speaker Change: And I think over the next several months, we will we'll tell the rest of the rest of that story.
Speaker Change: And that all of that helps smooth land in the direction that we talked about in Investor day, which helps our overall consolidated story and things like our operating margin target and just overall returns because there is a fair amount of capital employed and some of these businesses that we've now freed up.
So all in line with what we've been talking about over the last several quarters. So can I guess back to that can we put a new.
Speaker Change: Number on it in terms of gross revenue scale or.
Speaker Change: It sounds like gross profit was nothing on Brazil, but.
Speaker Change: This scale of Brazil, and the U S components that were shed.
Speaker Change: And maybe a dollar size of kind of <unk>.
Speaker Change: As a percentage of revenues you can look to shed going forward.
Speaker Change: Yes.
Speaker Change: Revenue sharing is an immaterial number again in Brazil.
Speaker Change: Net revenue was literally zero, so we werent generating any any gross profit than we had thought.
Speaker Change: $67 million of expenses, so very small.
Speaker Change: In the business in the U S.
Speaker Change: It's also a very small amount of revenue that was more shedding expenses than actual revenue.
Speaker Change: So.
Speaker Change: They're rounding errors for Europe to be honest in your modeling perspective, but they're they're instant improvement because we're taking out expenses without giving up next to next to no revenue.
Speaker Change: And you're saying, there's maybe one or two other opportunities like that.
Speaker Change: To pull out cost outpaced revenue.
Speaker Change: We still have some opportunities to the other opportunities may involve taking out some revenue, but likely taking out an equal amount of costs. So net net.
Speaker Change: Businesses that may not be generating with profitability that are weighing down our our operating margins and our returns because they're not really making much of a contribution fewer of those left but there is still a couple of opportunities like that.
Speaker Change: We're looking at.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Yes my following.
Speaker Change: The comment.
Speaker Change: Last quarter.
Speaker Change: The U S is the focus right large market.
Speaker Change: Our largest energy market in the world I'm still pretty pretty sure of that and then of course, we've got our sustainability business.
Speaker Change: Which natural gas and power, but the focus is really the U S steps.
Speaker Change: A big target for us and optimizing that so that's the name of the game.
Speaker Change: <unk>.
Speaker Change: In the go forward land portfolio.
Speaker Change: The sustainability business.
Speaker Change: <unk> got its ups and downs, but.
Speaker Change: We've got a runway to.
Speaker Change: Primary focus is U S gasoline and diesel business, we operate the largest card lock network in the U S. So that's going to be I think a bit.
Speaker Change: <unk>.
Speaker Change: Four.
Speaker Change: A clear and a simpler story.
Speaker Change: Basically discuss on a go forward basis.
Speaker Change: Wonderful.
Speaker Change: IRA if I could just follow up on one of the business lines on the metric gross profit per metric ton.
Speaker Change: It seems really volatile lately right you've gone down to eight.
Speaker Change: <unk> 34.
Speaker Change: Down 19% year over year after being up 10% in the third quarter down 13% in the second quarter.
Speaker Change: Maybe just delve into what's going on in marine in terms of obviously, we know the volatility in the shipping lanes, but but what's going on with your business.
Speaker Change: The margin in marine is always heavily dependent on volatility in pricing is pricing as pricing has softened we naturally have a tendency to see margins come down a bit I think the team has actually done a very good job glass half full and maintaining margins that are higher than historical levels relative to the current <unk>.
Nice environment, but they're still down compared to where we were.
Speaker Change: A year ago right, we started seeing that softening in the second quarter of last year. So what I was what I was thinking too earlier as we get into the second and third quarters the year over year comparisons should.
Speaker Change: Should be somewhat similar pricing and volatility levels stay in these levels, but we have still been through the first quarter dealing with year over year comparisons to higher prices and higher volatility.
So you.
Speaker Change: You haven't seen.
Speaker Change: Obviously since.
Speaker Change: These numbers are in dollars as opposed to <unk>.
Speaker Change: Those moves.
Speaker Change: And to look bit more meaningful, but they had been trading at a pretty in a pretty tight band relative to the.
Speaker Change: The underlying commodity price.
Speaker Change: Great and last one for me just on.
Speaker Change: On aviation you showed some some growth is that inter.
Speaker Change: International.
Speaker Change: Air freight growth.
Speaker Change: It's tied to is there something domestic increased contracts just trying to wonder a little bit different than what we are seeing economically a little bit stronger at three 5% up year over year in the fourth quarter.
Speaker Change: On the gallons I know you've got to have a note and everything out of there, but just wondering what what's driving the volume side you hit on it in your first couple of words most of the improvement was actually overseas in Europe, and Asia Asia was always the slowest to come back over the last few years. So we saw some improvement there in Europe was pretty strong as well so most of that.
Speaker Change: <unk> was born over outside of the U S.
Speaker Change: Is that tied to the de minimus or is that just.
Speaker Change: More consumer growth.
Speaker Change: Commercial commercial passenger growth principally okay.
Speaker Change: Great. Thank you very much appreciate the time.
Speaker Change: Thanks, Ken.
Speaker Change: Thank you once again to ask a question press star one on your telephone that star one one.
Speaker Change: Our next question.
Speaker Change: Comes from the line of John Real.
Speaker Change: With Jpmorgan. Please go ahead John.
John: Hi, good evening, thanks for taking my questions.
John: So my first question is on returns to shareholders and the buyback is kind of a flywheel there.
Speaker Change: Are you comfortable in that 70%, 75% range of free cash flow payout. This year can you do that level of returns and also preserve the dry powder that you might need for some of the acquisitions that Michael discussed in his opening.
So thanks for joining US again, John Great question, obviously, the 72% number is on the higher end of historical ranges for us.
Speaker Change: It was a year, where we had solid cash flow only made one small acquisition. So it enabled us to be a bit more aggressive in terms of the total capital that we were able to use for buybacks and dividends I wouldn't guarantee that we will always spent 72% I think at Investor Day, We said our longer term target was around 40.
There will be years, like 24, where we will be able to do and want to do more than that and there will be years, where the number will be closer to 40.
Speaker Change: So.
Speaker Change: I, probably can't give you a answer much much better than that but kind of the stars were in alignment this year because of our cash flow and the fact that we.
Speaker Change: We didn't we saw prices come down our working capital actually came down during the year contributing to that.
Speaker Change: Net cash flow production. So it just gave us more free powder more dry powder to to.
Speaker Change: To make those investments and acquisition values, we thought Brian its Brian right.
Speaker Change: And buybacks are easier to integrate the acquired companies.
Speaker Change: So the reason we did.
Speaker Change: Understood. Thank you and then.
Speaker Change: Maybe just to follow up on the land segment.
Speaker Change: Could you break down a little bit.
Speaker Change: Any of the components of the year over year.
Speaker Change: Gross profit growth.
Speaker Change: And when that you expect in <unk>.
Speaker Change: It sounds like maybe some of the North America exits were actually loss, making on the gross profit side. So maybe there is some of it is just from exiting those but I'm just trying to understand the high level drivers of the improvement in <unk> organically market, driven and any impact from those exits.
Speaker Change: Yes, we don't expect substantial increase year over year, but the improvements anticipated in the core so I would say that would principally be our card lock and retail businesses in North America.
Speaker Change: Where we expect a bit of improvement, obviously, brazil's out, but thats not really going to move the needle because that number was zero with the gross profit line.
Speaker Change: And.
Speaker Change: We're expecting a little bit of improvement in.
Speaker Change: On the Nat gas side of the equation as well on a year over year basis.
Speaker Change: Thank you.
Michael Caspar: Thank you I would now like to turn the conference back to Michael <unk> for closing remarks, Sir.
Michael Caspar: Okay, well, thanks, very much for joining us.
Michael Caspar: And.
Speaker Change: Thanks said two two global team, we've got we've got the best Global team and the business was burning desire to serve our customers suppliers and partners around the clock and it's a pleasure to serve with you. So thanks, everybody and look forward to talking to you next quarter.
Michael Caspar: Bye bye for now.
Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.