Q1 2025 World Kinect Corp Earnings Call

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Operator: Thank you for standing by and welcome to World Kinect Corporation's first quarter 2025 earnings conference call. At this time, all participants are in a listen only mode.

Speaker Change: Thank you for standing by and welcome to World connect corporations first quarter 2025 earnings Conference call.

Speaker Change: At this time all participants are in a listen only mode.

Operator: After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. To remove yourself from the queue, you may press star 11 again.

Speaker Change: After the speaker presentation, there will be a question and answer session.

Speaker Change: To ask a question during the session you will need to press star one one on your telephone.

To remove yourself from the queue you May press Star one one again.

Braulio Medrano: I would now like to hand the call over to Braulio Medrano, Senior Director of FP&A and Investor Relations. Please, go ahead. Thank you, Lateef, and good evening, everyone.

Speaker Change: I would now like to hand, the call over to Braulio Medrano Senior director of S. P N E and Investor Relations. Please go ahead.

Braulio Medrano: Thank you Latif and good evening, everyone. Welcome to the World connects first quarter 2025 earnings conference call, which will be presented alongside our five slide presentation. Today's presentation is also available via webcast on our Investor Relations website.

Braulio Medrano: Welcome to World Kinect's first quarter 2025 earnings conference call, which will be presented alongside our live slide presentation. Today's presentation is also available via webcast on our Investor Relations website. I'm Braulio Medrano, Senior Director of FP&A and Investor Relations.

Braulio Medrano: I'm, probably a medrano senior director of F PNA and Investor Relations.

Braulio Medrano: With us on the call today is Michael Kasbar, Chairman and Chief Executive Officer, and Ira Birns, Executive Vice President and Chief Financial Officer.

Speaker Change: With us on the call today is Michael Katz, our chairman and Chief Executive Officer, and IRA Birns Executive Vice President and Chief Financial Officer.

Braulio Medrano: And now I'd like to review our safe harbor state. 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 results to materially differ. Factors that could cause results to materially differ can be found in our most recent Form 10-K and other reports filed 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.

Braulio Medrano: Now I'd like to review, our Safe Harbor statement.

Braulio Medrano: Statements made today, including comments about our expectations regarding future plans and performance are forward looking statements.

Braulio Medrano: Are subject to a range of uncertainties and risks that could cause results to materially differ.

Braulio Medrano: That could cause results to materially differ can be found in.

Braulio Medrano: Our most recent Form 10-K, and other reports filed 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.

Braulio Medrano: 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.

Braulio Medrano: 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 then be followed by a question and answer carry.

Braulio Medrano: We will begin with several minutes of prepared remarks, which will then be followed by a question and answer period.

Michael Kasbar: At this time, I would like to introduce our Chairman and Chief Executive Officer, Michael Kasbar. Thank you, Braulio. Good evening, everyone. And welcome. And I welcome you to our call today.

Michael Katz: At this time I would like to introduce our chairman and Chief Executive Officer, Michael <unk>.

Michael Katz: Thank you <unk> good evening, everyone and welcome and I welcome you to our call today.

Michael Kasbar: Just over a year ago, we laid out a strategic roadmap to improve profitability and reduce earnings volatility. That included streamlining our portfolio and reducing our fixed cost structure to better position World Kinect for sustainable growth and enhanced resiliency in an increasingly volatile marketplace. As we assess the first quarter of 2025, while we face some macroeconomic headwinds in parts of our business, I am pleased that we have accelerated our progress towards achieving many of the strategic and operational objectives we had outlined. Our aviation business carried strong momentum from 2024 into the first quarter of 2025, delivering a healthy year-over-year increase in both volume and gross profit.

Michael Katz: Just over a year ago, we laid out our strategic road map to improve profitability and reduce earnings volatility.

Michael Katz: That included streamlining our portfolio, reducing our fixed cost structure to better better position world Kinect for sustainable growth and enhanced resiliency in an increasingly volatile marketplace.

Michael Katz: As we assess the first quarter of 2025, while we face some macroeconomic headwinds in parts of our business I am pleased that we have accelerated our progress towards achieving many of the strategic and operational objectives, we had outlined.

Michael Katz: Our aviation business carried strong momentum from 2024 into the first quarter of 2025, delivering a healthy year over year increase in both volume and gross profit.

Michael Kasbar: The Marine segment generated an earnings contribution generally consistent with the last three quarters, although lower than in the first quarter of 2024, when both bunker prices and market volatility were higher. In our last segment, the North American liquid land fuel business was negatively impacted by both market trends and broader economic conditions, which impacted our volume and margins. Nonetheless, it is in this business that we are most aggressively executing our platform consolidation, cost reduction, and capacity right sizing initiatives in a planned and orderly way. We expect the benefits of these actions to contribute to profit improvement by the second half of 2025, establishing a more focused and rateable growth vehicle for many years to come.

Michael Katz: The Marine segment generated an earnings contribution generally consistent with the last three quarters, although lower than in the first quarter of 2024, when both bunker prices and market volatility were higher.

Michael Katz: In our land segment, the North American liquid land fuel business was negatively impacted by both market trends and broader economic conditions, which impacted our volume and margins.

Michael Katz: Nonetheless, it is in this business that we are most aggressively executing our platform consolidation cost reduction and capacity right sizing initiatives and a planned and orderly way.

Michael Katz: We expect the benefits of these actions to contribute to profit improvement by the second half of 2025, establishing a more focused and ratable growth vehicle for many years to come.

Michael Kasbar: For more information, visit www.fema.gov To this end, following the sale of our Brazilian business announced in December, we recently finalized the divestiture of our UK land business as the latest step in our efforts to reshape our land portfolio. I want to thank all of the employees of this business for their dedication over the years and wish them well. Our UK land business has had a long and proud tradition of serving its loyal customer base, but unfortunately, the heavily weather dependent, acid intensive nature of this business is inconsistent with our strategic objectives. And this sale will allow us to redirect capital and management attention to the core business activities that better fit our desired portfolio.

Michael Katz: To this end following the sale of our Brazilian business announced in December we recently finalized the divestiture of our UK land business as the latest step in our efforts to reshape our land portfolio.

Michael Katz: I want to thank all of the employees of this business for their dedication over the years and wish them well.

Michael Katz: Our UK land business has had a long and proud tradition observing its loyal customer base, but unfortunately, the heavily weather dependent asset intensive nature of this business is inconsistent with our strategic objectives and this sale will allow us to redirect capital and management attention.

Michael Katz: <unk> core business activities that better fit our desired portfolio.

Michael Kasbar: In previous quarters, I have emphasized the value of our portfolio diversification, not only across various industrial and transportation sectors, but also within our geographic diversification. Significant uncertainty exists today regarding the manner in which changes in trade and tariff policies may ultimately impact international markets. We have consistently demonstrated that World Kinect's broad geographic footprint positions us well to participate in any shifts in the global movement of people and products.

Michael Katz: In previous quarters, I have emphasized the value of our portfolio diversification not only across various industrial and transportation sectors, but also within our geographic diversification.

Michael Katz: Significant uncertainty exists today regarding the manner in which changes in trade and tariff policies may ultimately impact international markets, but.

Michael Katz: But we have consistently demonstrated that world connects broad geographic footprint positions us well to participate in any shifts in the global movement of people and products.

Michael Kasbar: I'll wrap up my comments by emphasizing that first, we remain committed to our strategic and operational objectives, and second, we'll do this by leveraging our demonstrated expertise in last half mile distribution solutions.

Michael Katz: I'll wrap up my comments by emphasizing that first we remain committed to our strategic and operational objectives and second we will do this by leveraging our demonstrated expertise in last half mile distribution solutions.

Michael Katz: Okay.

Ira Birns: I look forward to reporting our continued progress over the balance of this year, and now I'll turn the call over to Ira for his financial review. Thank you, Michael. And good evening, everyone. Before we begin, as always, please note that our non-GAAP results reflect several adjustments to our GAAP results this quarter. Reconciliations are on our investor relations website and also in today's webcast presentation. Our first quarter non-GAAP adjustments totaled approximately $60 million or $48.4 million after tax. Approximately $45 million of the non-GAAP adjustments relate to the sale of our UK land business, which we completed earlier this month.

Michael Katz: I look forward to reporting our continued progress over the balance of this year and now I will turn the call over to IRA for his financial review.

Ira Birns: Thank you Michael and good evening everyone.

Ira Birns: Before we begin as always please note that our non-GAAP results reflect several adjustments to our GAAP results. This quarter reconciliations are on our Investor Relations website and also in today's webcast presentation.

Ira Birns: Our first quarter non-GAAP adjustments totaled approximately $60 million or <unk> $48 $4 million after tax.

Ira Birns: Approximately $45 million of the non-GAAP adjustments relate to the sale of our UK land business, which we completed earlier this month.

Ira Birns: As you are aware, earlier this year, we announced the sale of our business in Brazil that was underperforming and also faced unique country risk. This is part of our strategic journey to continue sharpening our portfolio of business activities in our land sector. Along these lines, in early April, we have now also sold our UK land business, which had principally focused on the heating oil market, which has certainly changed, as Mike mentioned, as weather trends and the energy landscape in the UK has evolved over time, making it more challenging to generate acceptable returns in that market.

As you are aware earlier this year, we announced the sale of our business in Brazil that was underperforming and also face unique country risks as part of our strategic journey to continue sharpening our portfolio of business activities in our land segment.

Ira Birns: Along these lines in early April we have now also sold our UK land business, which is principally focused on the heating oil market, which has certainly changed as Mike mentioned as weather trends in the energy landscape in the U K has evolved over time, making it more challenging to generate acceptable returns in that market.

Ira Birns: The total one-time non-cash pre-tax charge associated with this sale will be approximately $110 million. Since this transaction closed shortly after quarter end, we needed to record approximately $45 million of this amount as an asset impairment in the first quarter, with the balance of approximately $65 million to be recorded in the second quarter. Similar to Brazil, a significant portion of the overall charge, in this case approximately $55 million, relates to cumulative unrealized foreign currency translation losses previously included within shareholders' equity, which will be recorded as part of the second quarter chart. With these two moves completed, our land liquid fuels business is now effectively concentrated in North America, where we have greater scale and opportunities for operating leverage and significant growth potential over time.

Ira Birns: The total onetime noncash pre tax charge associated with the sale will be approximately $110 million.

Ira Birns: Since this transaction closed shortly after quarter end, we needed to record approximately $45 million of this amount is an asset impairment in the first quarter with a balance of approximately $65 million to be recorded in the second quarter.

Ira Birns: Similar to Brazil, a significant portion of the overall charge in this case approximately $55 million relates.

Ira Birns: It relates to the cumulative unrealized foreign currency translation losses previously included within shareholders' equity, which will be recorded as part of the second quarter charge.

Ira Birns: With these two moves completed our land liquid fuels business is now effectively concentrated in North America, where we have greater scale and opportunities for operating leverage and significant growth potential over time.

Ira Birns: and a clearer path to achieving enhanced returns in land and our broader financial targets across the business. By streamlining our portfolio, we are better positioned to execute against our strategic priorities and focus on business activities that better align with our long-term vision.

Ira Birns: And a clear path to achieving enhanced returns and land in our broader financial targets across the business.

Ira Birns: By streamlining our portfolio, we are better positioned to execute against our strategic priorities and focus on business activities that better align with our long term vision.

Ira Birns: I would also like to take a moment to thank all of our UK land employees for their hard work, dedication and contributions throughout the years. We wish them continued success in their next chapter. The remaining $15 million of the non-GAAP adjustments in the first quarter relate to restructuring activities during the quarter. We remain committed to strengthening our long-term financial performance, and these targeted restructuring actions, which span across the business, including corporate and back-office functions, are aimed at further improving our cost structure and driving increased profitability and returns. While these actions are always difficult, they do align with our broader effort to drive greater operating efficiencies and operating margins in our business.

Ira Birns: I would also like to take a moment to thank all of our UK land employees for their hard work dedication and contributions throughout the years, we wish them continued success in your next chapter.

Ira Birns: The remaining $15 million of the non-GAAP adjustments in the first quarter related to restructuring activities during the quarter.

Ira Birns: We remain committed to strengthening our long term financial performance and these targeted restructuring actions, which span across the business, including corporate and back office functions are aimed at further improving our cost structure and driving increased profitability and returns.

Ira Birns: While these actions are always difficult they do align with our broader effort to drive greater operating efficiencies and operating margins in our business.

Ira Birns: So now let's turn to our first quarter operating results. And as a reminder, these results exclude the non-GAAP adjustments I just reviewed. Consolidated volume was 4.2 billion gallons, down 5% year over year, and consolidated gross profit declined 9% from last year's first quarter to $230 million. The year-over-year decline in gross profit was principally driven by weaker-than-expected results in our land sector. and was also impacted by the sale of Avanode, which closed in the second quarter of 2024.

Ira Birns: So now, let's turn to our first quarter operating results and as a reminder, these results exclude the non-GAAP adjustments I just reviewed.

Ira Birns: Consolidated volume was $4 2 billion gallons down 5% year over year and consolidated gross profit declined 9% from last year's first quarter to $230 million a.

Ira Birns: The year over year decline in gross profit was principally driven by weaker than expected results in our land segment.

Ira Birns: He was also impacted by the sale of Avenova, which closed in the second quarter of 2020 for.

Ira Birns: This was partially offset by a solid year-over-year increase in gross profit in our core aviation. Now I'll provide some additional details for the quarter to help explain these movements within each segment. In the first quarter, aviation volume was 1.7 billion gallons of 2% year-over-year and gross profit was $116 million. That's a $7 million or 7% year-over-year increase driven by an increased profit contribution from our airport operations in Europe, strong inventory results more broadly, and increased profitability in general aviation. I should note again that aviation gross profit increased 7% year over year, despite the impact of the sale of Avanode, which had contributed approximately $10 million of gross profit in last year's first quarter.

This was partially offset by a solid year over year increase.

Ira Birns: And gross profit in our core aviation business.

Ira Birns: Now I'll provide some additional details for the quarter to help explain these movements within each segment.

Ira Birns: In the first quarter Aviation volume was one 7 billion gallons up 2% year over year and gross profit was $116 million that the $7 million or 7% year over year increase driven by an increased profit contribution from our airport operations in Europe strong inventory results more broadly it increased.

Ira Birns: Profitability and general aviation.

Ira Birns: I should note again that aviation gross profit increased 7% year over year. Despite the impact of the sale of Avenova, which had contributed approximately $10 million of gross profit in last year's first quarter.

Ira Birns: As we look to the second quarter, aviation volume and gross profit should be similar to what was a very strong quarter in the second quarter of 2024. Of course, in the current uncertain economic environment, things can change quickly. So while we are comfortable with this forecast based upon what we know today, we will be paying close attention to the market and our customers' potentially evolving requirements. While there has been recent dialogue on declining demand in the market, thus far this seems generally limited to domestic leisure travel with no real signs of weakness abroad. In the first quarter, land volumes decreased 6% year-over-year principally related to the sale of our operations in Brazil and the exit from certain operations in North America during the fourth quarter of last year.

Ira Birns: As we look to the second quarter aviation volume and gross profit should be similar to what was a very strong quarter in the second quarter of 2024.

Ira Birns: Of course in the current certain uncertain economic environment things can change quickly. So while we are comfortable with this forecast based upon what we know today, we will be paying close attention to the market and our customers potentially evolving requirements.

While there has been recent dialogue on declining demand in the market. Thus far this seems generally limited to domestic leisure travel with no real signs of weakness abroad.

Ira Birns: In the first quarter land volumes decreased 6% year over year, principally related to the sale of our operations in Brazil, and the exit from certain operations in North America during the fourth quarter of last year.

Ira Birns: Laird adjusted gross profit in the first quarter with $79 million, that's a 19% decline year-over-year. The year-over-year decrease was principally driven by weakness in our core North American fuel business, where industry trends and economic headwinds impacted both volume and margins in the first quarter. While our first quarter land results were certainly weaker than expected, our strategy of sharpening our land portfolio of business activities, as evidenced by the sale of our business in Brazil and the UK, and driving greater efficiencies in our core land business, has not changed.

Ira Birns: Adjusted gross profit in the first quarter was $79 million, that's a 19% decline year over year.

Ira Birns: Year over year decrease was principally driven by weakness in our core North American fuel business, where industry trends and economic headwinds impacted both volume and margins in the first quarter.

Ira Birns: While our first quarter land results were certainly weaker than expected our strategy of sharpening our land portfolio of business activities as evidenced by the sale of our business in Brazil, and the U K and driving greater efficiencies in our core land business has not changed.

Ira Birns: As we've indicated in the past, our journey to build a more profitable and resilient land platform is prone to bumps along the road, but we remain confident that we are moving in the right direction and should deliver improving results, margins, and returns as we look forward. Looking to the second quarter specifically, we expect land growth profit to be up year-over-year despite the impact of the recent Brazil and UK divestitures. Again, with greater improvement expected in the second half of the year as we continue to drive more efficiencies in the land North American platform. First quarter marine volumes were down 14% year over year, and while marine gross profit was up 4% sequentially, it declined about 26% year over year.

Ira Birns: As we've indicated in the past our journey to build a more profitable and resilient land platform is pros are bumps along the road, but we remain confident that we are moving in the right direction and should deliver improving results margins and returns as we look forward.

Ira Birns: Looking to the second quarter, specifically, we expect land gross profit to be up year over year. Despite the impact of the recent Brazil, and UK divestitures again with greater improvement expected in the second half of the year as we continue to drive more efficiencies in our land North American platform.

Ira Birns: First quarter Marine volumes were down 14% year over year, and while marine gross profit was up 4% sequentially. It declined about 26% year over year.

Ira Birns: The year-over-year decline in volume and gross profit principally relates to lower bunker fuel prices and reduced volatility compared to the first quarter of 2024, as well as growing uncertainty related to rapidly evolving and generally unpredictable trade policies. As evidence of the impact of such uncertainty on the broader market, volume in Singapore, the world's largest bunker fuel hub, dropped to its lowest level in nearly two years in the first quarter, principally tied to a decline in tanker and dry bulk activity. Looking to the second quarter, we expect marine gross profit to be down modestly year-over-year, assuming continuing uncertainty in the global shipping market, although it is important to note that the upcoming change in the Mediterranean EcoStandard, which goes into effect next week on May 1st, could lead to short-term supply and demand imbalances and even logistical challenges.

Ira Birns: Year over year decline in volume and gross profit principally relates to lower bunker fuel prices and reduced volatility compared to the first quarter of 2024, as well as growing uncertainty related to rapidly evolving and generally unpredictable trade policies as.

Ira Birns: As evidenced through the impact of such uncertainty on the broader market volume in Singapore, the world's largest bunker fuel hub dropped to its lowest level in nearly two years in the first quarter, principally tied to a decline in tanker and drybulk activities.

Ira Birns: Looking to the second quarter, we expect marine gross profit to be down modestly year over year, assuming continuing uncertainty in the global shipping market.

Ira Birns: Though it is important to note that the upcoming change in the Mediterranean <unk> standard, which goes into effect next week on May <unk>.

Ira Birns: Lead to short term supply demand imbalances and even logistical challenges. These factors could provide some upside opportunities over the balance of the second quarter.

Ira Birns: These factors could provide some upside opportunities over the balance of the second quarter. Despite a level of uncertainty in some of the markets we serve, we expect second quarter consolidated gross profit to be in the range of $235 to $244 million. And as a reminder, these numbers now exclude the Lamb UK business we just sold. While we came up a bit short of expectations for consolidated gross profit, adjusted consolidated operating expenses were $178 million in the first quarter, below the guidance provided last quarter, and down 6% year over year. For the second quarter, we're expecting adjusted operating expenses of $175 to $179 million, representing another year-over-year decline, impacted by both our recent divestitures as well as the restructuring activities during the first quarter.

Ira Birns: Despite a level of uncertainty in some of the markets. We serve we expect second quarter consolidated gross profit to be in the range of $235 million to $244 million and as a reminder, these numbers now exclude the lab UK business, we just sold.

Ira Birns: While we came up a bit short of expectations for consolidated gross profit adjusted consolidated operating expenses were 178 million in the first quarter below the guidance provided last quarter and down 6% year over year.

Ira Birns: For the second quarter, we're expecting adjusted operating expenses of $175 million to $179 million representing.

Ira Birns: Representing another year over year declined impacted by both our recent divestitures as well as the restructuring activities during the first quarter.

Ira Birns: Interest expense was $23 million in the first quarter, down a little over 20% year-over-year and consistent with the guidance provided last quarter. For the second quarter, we expect interest expense to be in the range of $24 to $27 million. Our adjusted effective tax rate in the first quarter was 15 percent. This was positively impacted by discrete tax benefits, and that drove our rate below our full year guidance range of 22 to 25 percent. We now expect our full-year adjusted effective tax rate to be slightly lower than originally projected, somewhere in the range of 22 to 24%.

Ira Birns: Interest expense was $23 million in the first quarter down a little over 20% year over year and consistent with the guidance provided last quarter for the second quarter, we expect interest expense to be in the range of $24 million to $27 million.

Ira Birns: Our adjusted effective tax rate in the first quarter was 15%. This was positively impacted by discrete tax benefits and that drove our rate below our full year guidance range of 22% to 25%.

Ira Birns: We now expect our full year adjusted effective tax rate to be slightly lower than originally projected somewhere in the range of 22% to 24%.

Ira Birns: During the first quarter, we generated operating cash flow of $114 million and free cash flow of $99 million, demonstrating our ability to deliver strong cash flow even during periods of market uncertainty. We also repurchased $10 million of shares during the first quarter, reiterating our continued commitment to enhancing shareholder value through both buybacks and dividends.

During the first quarter, we generated operating cash flow of $114 million and free cash flow of $99 million.

Ira Birns: Our ability to deliver strong cash flow even during periods of market uncertainty.

Ira Birns: We also repurchased $10 million of shares during the first quarter reiterating our continued commitment to enhancing shareholder value through both buybacks and dividends.

Ira Birns: In closing, I'd like to leave you with a few thoughts. Our aviation segment delivered solid year-over-year results driven by strong results across the business. While our land segment experienced weakness in our North American fuels business, now that we have exited both Brazil and the UK, which required significant management attention and continued investment, we are able to more fully focus on our core domestic land market. We have continued to position our land business for sustainable growth, with significant opportunities remaining to scale and improve operating efficiency. Additionally, our relatively low North American market share highlights the potential for meaningful growth opportunities in this business looking forward.

Ira Birns: In closing I'd like to leave you with a few thoughts our aviation segment delivered solid year over year results driven by strong results across the business.

Ira Birns: While our land segment experienced weakness in our North American fuels business now that we have exited both Brazil, and the U K, which required significant management attention and continued investment.

Ira Birns: We're able to more fully focus on our core domestic land market.

Ira Birns: We have continued to position our land business for sustainable growth with significant opportunities remain to scale improve operating efficiencies.

Ira Birns: Additionally, our relatively low north American market share highlights the potential for meaningful growth opportunities in this business looking forward.

Ira Birns: Marine-delivered results generally aligned with expectations, despite an elevated level of uncertainty in the shipping industry, accentuated by a rapidly evolving trade policy. We took actions to further right-size our cost structure by reducing headcount during the first quarter, immediately improving operating efficiency. We generated strong operating and free cash flow results this quarter, while also repurchasing $10 million of shares demonstrate our continued commitment to enhancing shareholder value. While the broader macroeconomic environment remains uncertain, we've built a resilient and agile operating model that enables us to adapt quickly to changing market conditions as it has in the past.

Ira Birns: Marine delivered results generally in line with expectations, despite an elevated level of uncertainty in the <unk>.

Ira Birns: <unk> by a rapidly evolving trade policy.

Ira Birns: We took actions to further right size, our cost structure by reducing head count during the first quarter immediately improving operating efficiency.

Ira Birns: We generated strong operating and free cash flow results. This quarter, while also repurchasing 10 million shares demonstrate our continued commitment to enhancing shareholder value.

Ira Birns: While the broader macroeconomic environment remains uncertain, we built a resilient and agile operating model that enables us to adapt quickly to changing market conditions as it has in the past.

Ira Birns: And in closing, our strong balance sheet, disciplined working capital management, and heightened focus on operational efficiencies positions us well to navigate near-term challenges while also making progress toward broader financial targets.

Ira Birns: And in closing our strong balance sheet disciplined working capital management and heightened focus on operational efficiencies positions us well to navigate near term challenges, while also making progress.

Ira Birns: Toward water financial targets. Thank.

Ira Birns: Thank you very much.

Operator: I would like to now turn the call back over to our operator Lateef to open up the Q&A session. As a reminder to ask a question, you will need to press star 11 on your telephone. To remove yourself from the queue, please press star 11 again. Please stand by while we compile the Q&A roster.

Ira Birns: Thank you very much I would like to now turn the call back over to our operator Latif to open up the Q&A session.

Ira Birns: As a reminder to ask a question you will need to press star one on your telephone to remove yourself from the queue. Please press star one again, please standby, while we compile the Q&A roster.

Ken Hoexter: Our first question comes from the line of Ken Hoexter of B of A. Please go ahead, Ken. Hey, great. Good afternoon, Michael and Ira. You know, maybe just talk a little bit about the UK sale, right? So ever since you bought it, we've always heard about the volatility, particularly in the in the first quarter, fourth quarter. So the first quarter's already passed, so how do we think about land? volumes. I don't know if you can give us some numbers what's being pulled out.

Speaker Change: Our first question comes from the line Ken <unk> Bofa. Please go ahead Ken.

Ken: Hey, great good afternoon, Michael and IRA.

Speaker Change: Yes.

Speaker Change: Maybe just talk a little bit about.

Speaker Change: The UK sale right. So we ever since you bought it we've always heard about the volatility, particularly in the first quarter fourth quarter.

Speaker Change: So the first quarter has already passed so how do we think about land.

Speaker Change: Volumes I don't know if you can give us some numbers, what's being pulled out.

Michael Kasbar: and obviously what how we should think about was it on flat to profit was it is this going to be a creative getting rid of it maybe walk us through some of the factors. Great question so always being prepared for you can volume in that business in 2024 was just under 375 million gallons. So obviously, that was more heavily tilted towards Q4 and Q1. But the number is about $375 million on an annual basis. And in terms of your accretive question, which is a good one, it is accretive because if you use 24 as a proxy, that business was generating an operating loss.

Speaker Change: And obviously, what how we should think about was it.

Speaker Change: Flat to profit was is this going to be accretive getting rid of it maybe walk us through some of the that range or is there.

Speaker Change: Great questions. So always being prepared for you can volume in that business. In 2024 was just under 375 million gallons. So.

Speaker Change: Obviously, there was more heavily tilted towards Q4 and Q1.

Speaker Change: But the.

Speaker Change: The number is about $375 million.

Speaker Change: Annual basis.

Speaker Change: And in terms of your accretive question, which is a good one it is accretive because our.

Speaker Change: In 2024 as a proxy.

Speaker Change: That business was generating an operating loss.

Michael Kasbar: And while we did generate some profit in the first quarter, our forecast for the rest of this year was not as rosy. So it's an immediate benefit to the P&L, immediately improves land's operating margin. And it's just what was becoming a bit of a distraction in a difficult environment with weather trends. It hasn't been the last time you were in the U.K. for the holidays or December or January. It hasn't been really cold there for a very long time. So that's certainly impacted the heating oil piece of that business, which is what we always relied on in the winter.

Speaker Change: And while we did generate some profit in the first quarter our forecast for the rest of this year was.

Speaker Change: It was not is not as rosy so.

Speaker Change: Immediate benefit to the P&L immediately improves land's operating margin it is just.

Speaker Change: What was say, becoming a bit of a distraction in a difficult environment.

Speaker Change: With weather trends.

Speaker Change: It Hasnt been for the last time you were in the UK.

Speaker Change: The holidays are December January it hasnt been really cold there for a very long time, so thats.

Certainly impacted the heating oil piece of that business, which is what we always relied on in the winter. So we.

Michael Kasbar: So we made the move to move on, get some cash out of it. That business also was a piece of our CapEx. We're continually upgrading the physical infrastructure. There's something we also don't have to do anymore. So it brings our CapEx run rate down a little bit. So about, am I right about 6% of your overall volumes for, for, for ground?

We made the move to.

Speaker Change: To move on give some.

Speaker Change: To give some cash out of it that business I'll also.

Speaker Change: Was the piece of our Capex.

Speaker Change: Continually upgrading the physical infrastructure. There is something we also have to do anymore. So it brings our capex run rate down a little bit as well.

Speaker Change: So about right about 6% of your overall volumes for for for ground.

Michael Kasbar: that's about right yeah yeah so but but it's not clearly it's not evenly spread right so it's it you said a heavily weighted is there a number you could Unknown Executive, John Royall, Graham Price, Unknown Executive, Unknown Executive, Unknown Unknown Executive, John Royall, Graham Price, Unknown Executive, Unknown Executive, Unknown So can you remind me what you paid for the business and what cash, I know you've taken the write-off, but what do you get that you can now redeploy after the sale? Thanks for asking the question. We paid a bit north of, you know, many moons ago, a bit north of $150 million.

Speaker Change: That's about right, yes, yeah, so, but it's not clearly it's not evenly spread right. So you said heavily weighted is there a.

Speaker Change: Number you could you could provide in terms of kind of distribution or it's.

Speaker Change: It's not <unk>.

Speaker Change: Yes.

Speaker Change: It actually is fairly I would say, maybe it's 60% in Q4, and Q1 and 40% of the volume in the in the other.

And the other two quarters.

Speaker Change: Fourth quarter last year was a bit on the weaker side. So that that was even made it a bit more even in all of it historically I would say a 60, some odd percent of the volume was spread throughout.

Speaker Change: The fourth and first quarters with a balanced and the weaker.

Speaker Change: Summer months, where we didn't have the heating oil activity.

Speaker Change: So can you remind me what what you paid for for the business and what cash I know you've taken a write off but what have you got that you can now redeploy after after the sale.

Speaker Change: Thanks Rich.

Speaker Change: We paid a bit north of many moons ago, a bit north of $150 million, it's fair to say that.

Michael Kasbar: It's fair to say that we did generate a significant amount of cash flow over the years in that business. The first several years, we actually did very, very well during COVID. During that unique time period, that business performed very well. We're getting somewhere in the neighborhood of, you know, $50 million plus today. So not, you know, not a phenomenal number, but it's $50 million in the bank. And we, you know, we cut off the need to continue investing in that. So, is that something you take that cash, redeploy it in additional land-based facilities in the U.S.?

Speaker Change: We did generate.

Speaker Change: A significant amount of cash flow over the years in that business. The first several years, we actually did very very well during COVID-19 and through.

Speaker Change: That unique time period that business performed very well.

Speaker Change: We're getting somewhere in the neighborhood of <unk>.

Speaker Change: $50 million plus today so.

Speaker Change: Not a phenomenal number but its $50 million in the bank.

Speaker Change: And we cut off the need to continue investing in that business going forward.

Speaker Change: So is that something you would take that cash redeploy it and additional land base facilities in the U S or.

Michael Kasbar: Or, you know, how should we think about kind of this? In the short term, it repays debt, but obviously it does increase our available liquidity and capital to focus on investing in the U.S. So, yes, that's a reasonable statement or, you know, or in other parts.

Speaker Change: How should we think about kind of this.

In the short term it repays debt, but obviously it does increase our available liquidity and capital too.

Speaker Change: Focus on investing in the U S. So, yes, that's a reasonable statement or or in other parts of our business.

Ira Birns: Okay, and then maybe just if I could wrap up before handing over to Ben, the aviation, obviously a strong quarter you mentioned not only the 1.7 billion gallons up 1.5% but really the gross profit I guess really was a lot stronger than anticipated. Can you just help me understand what drove that? Is that pricing and increased demand? Is that more passenger flying? What is driving the aviation?

Ben: Okay, and then maybe just if I could wrap up before handing over to Ben.

Ben: Aviation obviously are strong.

Ben: Quarter, you mentioned not only the 1 billion 70 gallons up one 5%, but really the.

Speaker Change: Gross profit I guess really was a lot stronger than anticipated can you just help me understand what what drove that is that pricing and increased demand is that more passenger flying what is driving the aviation.

Ben: Profitability.

Ira Birns: that you were we continue to you know, the mix of that business has continued to evolve over time. The European assets that we have where we're selling fuel on airport at 100 or so locations, most of them in Europe, there's some in Canada as well, has been performing very, very well. That's a different go-to-markets, our last half-mile piece of the aviation business. So that business performed well from both a volume and a margin standpoint. There's more sustainable product going into those markets today, so that contributes a bit to margin as well. And our general business and general aviation business is performing very well, which is more spread throughout the world, including the US.

Ben: We continue to.

Ben: <unk>.

Ben: The mix of that business has continued to evolve over time, the European assets that we have where we're selling fuel on airport at.

Ben: A 100 or so locations most of them most of them in Europe. There is some southern Canada as well as has been performing very very well.

Ben: A different.

Ben: Go to markets, our last half mile piece of the aviation business, So that business performed well from both a volume.

Ben: And a margin standpoint, there is more.

Ben: Sustainable product going into those those markets today, so that contributes a bit to margin as well and our general business and general aviation businesses performing.

Ben: Very well, which is which is more spread throughout the world, including the U S.

Ira Birns: So really, we did, proud of the team, we just performed very well across the entire business, taking advantage of market opportunities and increased our margins a bit and our volumes a bit as well.

Ben: So really we did proud of the team we just performed very well.

Ben: Cross the entire business taking advantage of.

Ben: Market opportunities and the increased our margins a bit and our volumes a bit as well.

Ken Hoexter: Wonderful. Appreciate the thought and time. Let me turn it back to you. Thanks.

Ben: Wonderful I appreciate the thought in time.

Ben: Let me turn it back to you. Thanks.

Ben: Thank you.

Ben Nolan: Our next question comes from the line of Ben Nolan of Stiefel. Question please, Ben. Yeah, thank you, Albert. And thanks for, Ken, for putting me in there.

Ben: Our next question.

Ben: From the line of Ben Nolan of Stifel.

Ben: <unk> please begin.

Ben: Yes. Thank you Albert Thanks for Ken for putting in there.

Ira Birns: So I wanted to Ira Mike, I wanted to ask a little bit about I had trouble getting my head around what was happening in the land segment. You said there was a 6% decline in volumes associated primarily with the sale of the Brazil business, but then you also talked about how volumes were down as a function of industry trends, and that also was a big contributor to the decline in gross profit. But then you're expecting 2Q to be relatively similar to what it was last year, although it seems like, I don't know, it seems like, if anything, industry trends are more opaque now.

Ben: So I wanted to.

Ben: I'll remind.

Ben: I wanted to ask a little bit about I'm, having trouble getting my head around what was happening in the land segment.

Ben: You said there was a 6% decline in volumes associated primarily with.

Ben: The sale of the Brazil business.

Ben: And but then you also talked about how volumes were down as a function of industry trends that also.

Ben: It was a big contributor to the decline in gross profit.

Ben: But then youre expecting <unk> to be relatively similar to what it was last year, although it seems like.

Ben: I don't know it seems like if anything industry trends are more opaque now.

Ira Birns: Can you maybe walk me through how you're just thinking about all of that? Yeah, so a lot to unpack there. But you know, one thing I'll start backwards from where you ended, you know, last, we don't have a really high hurdle. In terms of second quarter last year, that was a relatively weak quarter, we'll do better than that. But again, that is consistent with the story, considering the fact that the second quarter last year, you know, had some challenges as well. So there's a couple pieces to the pie, similar to the general statements across the business.

Ben: Can you maybe walk me through how you're just thinking about all of that.

Speaker Change: Yes, so a lot to unpack there but.

Speaker Change: One thing I'll start backwards from where you ended less.

Speaker Change: We don't have a really higher hurdle in.

Speaker Change: In terms of the second quarter last year that was a relatively weak quarter, we'll do better than that but again.

Speaker Change: That is consistent with the story considering the fact that the second quarter last year.

Speaker Change: Had some challenge as well as physically there is a couple of pieces to the pie similar to the general statements across the business.

Ira Birns: You know, economic uncertainty has affected certain types of customers in, in different parts of the country, you know, as an example, there's on the East Coast, in some of our card lock business, we had a few customers that simply disappeared during the first quarter, either go out of business, you know, cease operations in, you know, supporting different, different industries. On the West Coast, the story I try to tell, hopefully tell better this time than I did a few quarters ago, as that market continues to evolve, and that's a big market for us, when I say continues to evolve in terms of moving more and more to renewable products.

Speaker Change: Economic uncertainty has affected certain types of customers.

Speaker Change: In different parts of the country as an example, there is on the east coast.

Speaker Change: Some of our card lock business, we've had a few customers just simply disappear during the first quarter either go out of business cease operations.

Speaker Change: In supporting different differ.

Speaker Change: Different industries.

Speaker Change: On the West Coast.

Speaker Change: The story I try to tell hopefully has held better this time than I did a few quarters ago as.

Speaker Change: As that market continues to evolve and Thats, a big market for us when I say continues to evolve in terms of moving more and more to renewable products.

Ira Birns: That has resulted in a reduction in supply of traditional fuels. from major refiners in California that are retooling all their refineries to go to renewables. So it's just changing the dynamics of our ability in the short term to optimize our supply position that's affected our margins. In that part of the country, the team is constantly evaluating opportunities to improve our optionality within our own supply chain, but in the short term, that's affected. margins more than it has volume, right? So there's a little bit of volume decline based on the economy, pockets of customers, just not having the same position in the ecosystem as they may have had before.

Speaker Change: That that has resulted in a reduction in supply of traditional fuels domestically for major refineries in California that are retooling all the refineries to go to renewables.

Speaker Change: So it is just changing the dynamics of our ability in the short term to optimize our supply position that's affected our margins in that part of the country. The team is constantly evaluating opportunities to improve our optionality within our own supply chain.

Speaker Change: But in the short term that's affected.

Speaker Change: Margins more than it has volume prices a little bit of volume decline based on the economy pockets of customers just not.

Speaker Change: Having the same position in the ecosystem as they may have had before and then we've got some of those supply dynamics in California at the same time, we're also working just optimizing our.

Ira Birns: And then we've got some of those supply dynamics in California. At the same time, we're also working just optimizing our business overall in terms of the number of trucks we have, drivers, supply route optimization. That's something that the team is working on religiously every day that we see that is starting to pay dividends more in the second half of this year. So, yeah, as we said, right, that business is still a work in progress. We've eliminated some of the big distractions in Brazil and the UK, and now we're doing everything we can to focus on driving both volume and operating efficiencies which improve our ability to generate a margin in the domestic market.

Speaker Change: Our business overall in terms of.

Speaker Change: The number of trucks, we have drivers supply supply route optimization thats something that the team is working on religiously every day that we see.

Speaker Change: Starting to pay dividends more in the second half of this year.

Speaker Change: So yes, we said that business is still work in progress we've eliminated some of the big distractions in Brazil, and the U K and now we're doing everything we can to.

Speaker Change: Our focus on driving both volume and operating efficiencies, which improved our ability to generate a margin.

Speaker Change: In the domestic business.

Ben Nolan: I think that covers the various facets of it. That was helpful. Yeah, I those details. certainly got me in the right direction. So I appreciate it.

Speaker Change: I think that numbers.

Speaker Change: Various fab.

Speaker Change: <unk>.

Speaker Change: That was helpful.

Speaker Change: Hi.

Speaker Change: Those details.

Speaker Change: Certainly you got me in the right direction. So.

Speaker Change: Appreciate it.

Ira Birns: I also wanted to ask a little bit about subsequent on the land side subsequent to some of the restructuring that you've done even over and above. I think it was over and above just the getting out of the UK and Brazil, but just in general sort of sounds like you were Cutting costs elsewhere. Do you think you're in a place where there can be a material step change in margins? Do you feel like where you're landing here is going to be substantially more profitable on a per-gallon basis? and where we had been. I would point you more towards operating margin than, you know, look, we're always trying to optimize the per gallon profitability, but really count to the end of the day is what drops to, to, you know, our operating margin, we've been kind of stuck in the same zip code, somewhere around, you know, 25%, you know, for a while with a 30% target that we put out there, we had our investor day, I think between the, the vestitures, the restructuring activity, as you just said, above and beyond the exits that we did in terms of taking some costs out in the first quarter and continuing to, you know, to fine tune the core land business.

Speaker Change: I also wanted to ask a little bit about.

Speaker Change: Subsequent on the land side subsequent to some of the restructuring that you've done even over and above.

Speaker Change: I think it was over and above.

Speaker Change: <unk>.

Speaker Change: Getting out of the UK and Brazil, but just in general sort of it sounds like you were.

Speaker Change: Cutting cost elsewhere.

Speaker Change: Hum.

Speaker Change: Thank you.

Speaker Change: Do you think you are in a place where there can be a material step change in margins.

Speaker Change: Or do you feel like where you're landing here is going to be.

Speaker Change: Substantially more profitable on a on a per gallon basis than more.

Speaker Change: We had been.

Speaker Change: I would point you more towards operating margin and then look we're always trying to optimize the per gallon profitability, but really counts at the end of today's with drops to two our operating margin we've been kind of stuck in the same Zip code.

Speaker Change: Somewhere around 25%.

Speaker Change: For a while with a 30% target that we put out there we had our investor day I think between the divestitures the restructuring activity as you just said above and beyond the exits that we did in terms of taking some cost out in the first quarter and continuing to.

Speaker Change: To fine tune the core land business.

Ira Birns: We're that's certainly helping us make progress towards that 30% target, we're probably won't get the whole way there this year. But we should get, you know, we should make some healthy progress towards that number this year, which we didn't last year. And that, you know, that contributes to cash flow contributes to, you know, EPS accretion, and improvement in returns. So that's certainly a possibility how much that step changes in your words, you know, TBD, but we've certainly improved the odds of, you know, those needles moving in the right direction with with the moves that that we've talked about today and previously.

Speaker Change: That's certainly.

Speaker Change: Certainly, helping us make progress.

Speaker Change: Towards that 30% target, we probably won't get the whole way there this year, but we should get.

Speaker Change: We should make some healthy progress towards that number this year, which we didn't last year.

Speaker Change: That contributes to cash flow contributes to EPS accretion.

Speaker Change: And improvement in returns so that certainly a possibility how much that step changes in your words.

Speaker Change: But we've certainly improved the odds.

Speaker Change: Of those needle is moving in the right direction with the moves that we've talked about today and previously.

Ira Birns: Okay. And then, and then lastly, for me, just as you look forward, anything, you know, first of all, another decent quarter here in terms of free cash flow, as we're looking out into subsequent quarters, and given all of the moving parts here, anything that should be any different, or should we think about the free cash flow or cash flow coming to you any differently than the last several quarters, or it's where we are is now kind of a way to think about it going forward. Sure.

Speaker Change: Okay, and then and then lastly for me just as you look forward anything.

Speaker Change: First of all another decent quarter here in terms of free cash flow.

Speaker Change: As we're looking out into subsequent quarters in the given all of the moving parts here or anything that we.

Speaker Change: Should be any different or should we think about.

Speaker Change: The.

Speaker Change: Free cash flow or cash flow coming to you any differently than the last several quarters.

Speaker Change: Where we are is now kind of a way to think about it going forward.

Ira Birns: Like, you know, prices are now pretty low. We've had two really healthy quarters of cash flow in a row. I wouldn't count on us delivering $100 million of free cash flow per quarter. That would be about double our kind of forecasted run rate, you know, at Investor Day. So, but, you know, our goal is to, you know, to deliver numbers in that ballpark. You know, could we outperform that this year with a strong beginning we had in Q1? I hope so. But I guess the one message is I wouldn't expect $100 million a quarter of cash flow.

Speaker Change: Prices are now pretty low we've had two really healthy quarters of cash flow in a row I wouldnt count on us delivering $100 million of free cash flow per quarter that would be about <unk>.

Speaker Change: <unk> are kind of forecasted run rate at Investor day.

Speaker Change: So.

Speaker Change: But our goal is to.

Speaker Change: To deliver on <unk>.

Speaker Change: In that ballpark could we outperformed that this year with a strong beginning we had in Q1 I hope so but I guess the one message is I wouldn't expect $100 million a quarter of free cash flow.

Ira Birns: But obviously, the goal is to try to deliver as much as we can on a quarterly basis while also making the right investments in the business that generate the returns that will drive profit.

Speaker Change: Got it but but obviously if the goal is to try to deliver as much as we can on a quarterly basis, while while also making the right.

Speaker Change: <unk> and the business that generate the returns that will drive profitability.

Ira Birns: All right. I appreciate it. Thank you.

Speaker Change: Alright I appreciate it thank you.

Speaker Change: Thank you.

John Royall: Our next question. comes from the line of John Royall of J.P. Morgan.

Speaker Change: Next question.

Speaker Change: It comes from the line of John Real of Jpmorgan. Your question. Please John.

John Royall: Your question please, John. Hi, good evening. Thanks for taking my question.

John Real: Hi, good evening, Thanks for taking my question.

Ira Birns: So my first question is, maybe you could give a little more detail on the restructuring actions in the quarter and just, you know, maybe the different buckets and how much savings you think will come out of each of the actions? And should we expect more charges in future quarters? Or was this kind of everything in one cue? Thanks for the question, John. So, you know, we took a $15 million charge, which is almost completely related to, you know, I kind of hate to say it, because there's always a sad part to a story like this related to people, right?

John Real: So my first question is maybe you could give a little more detail on the restructuring actions.

John Real: During the quarter.

John Real: Just maybe the different buckets and how much savings.

John Real: I think we'll come out of it of each of the actions.

John Real: Should we expect more charges in future quarters or is this kind of everything in <unk>.

John Real: Thanks, Thanks for the question John.

John Real: So we took a $15 million charge, which is almost completely related to kind.

John Real: Kind of hate to say it because there's always a sad part two is store like thats related to people right, you're just driving efficiencies in the head count side.

Ira Birns: Just driving efficiencies in the headcount side of the business, right? It's as simple as that. And it's across the business. So it's, you know, people that are kind of in the unallocated corporate bucket, but also people in land, aviation, marine, I would say, a heavier concentration related to corporate and land, but there, you know, there was, you know, some elements across the other segments. As will be disclosed in our 10Q in the morning, that should result in about $30 million of annualized cost savings. We probably won't recognize the full quarterly run rate of that until the third quarter, because some of those activities were, you know, still kind of underway and not fully completed by, you know, by today.

John Real: The business right, it's as simple as that and it's it's across the business. So.

John Real: People that are kind of in the unallocated corporate budget bucket, but also people in land aviation Marine I would say a heavier concentration.

John Real: Related to corporate and land, but there there was some elements across the other segments.

John Real: As will be disclosed in our 10-Q in the morning.

John Real: That should result in about $30 million of.

John Real: Annualized cost savings, we probably will recognize the full quarterly run rate of that until the third quarter because some of those activities were.

John Real: Still kind of underway.

John Real: Not fully completed by.

John Real: By today.

Ira Birns: So should you expect more? I, you know, can't tell you that at this point, but I also say that there's always opportunities. We are looking at some, you know, some specific, you know, opportunities to further reduce costs, but, I haven't completely nailed that yet. And when we're ready, you know, we'll share that. But in the very short term, the goal was to try to get whatever we thought was available and sensible done in the first quarter. So that project, if you will, is... is complete.

John Real: So.

John Real: Should you expect more I can't tell you that at this point, but I can also say that there is always opportunities.

John Real: We are looking at some.

John Real: Some specific.

John Real: Opportunities to further reduce costs, but haven't completely nailed that yet and when we're ready.

John Real: Sure that.

John Real: But.

John Real: In the very short term the goal is to try to get whatever we thought was available and sensible done in the first quarter.

John Real: So that that project if you will is.

John Real: Is complete.

Ira Birns: Great, thank you, Ira.

John Real: Alright, Thank you IRA and then.

Ira Birns: And then my next question is on M&A. Maybe you could talk about how you you see the opportunity set and the pipeline today for acquisitions. Does anything about the uncertainty in the current environment maybe make you pause on things like M&A until there's a little more clarity?

John Real: My next question is on M&A.

John Real: Maybe you could talk about how you see the opportunity set in the pipeline today for acquisitions.

John Real: Does anything about the uncertainty in the current environment, maybe make you pause on things like M&A until there's a little more clarity or is it kind of more ordinary course right now.

Ira Birns: Or is it kind of more ordinary course right now? I would say generally, it's ordinary course, you know, there there's always, I would say the pipeline of opportunities has been pretty stable, it's not growing dramatically, it's not shrinking, we certainly are seeing a bit more, hope they're not listening, but sensibility on the side of sellers in terms of expectations, which creates more opportunities, right? Because we're, we're never one, at least at this stage in our lives to look to, you know, to overpay, to, you know, to bring on some inorganic growth. The, you know, interest rate environment has been hanging a little higher, we're hoping that we'd be in a different place, as of today, which would make, you know, that that opportunity set stronger, that's taken a little longer than, than we thought.

John Real: I would say generally it's ordinary course.

John Real: There is always.

John Real: I would say the pipeline of opportunities has been pretty stable, it's not growing dramatically, it's not shrinking we certainly.

John Real: Are seeing a bit more.

John Real: They are not listening, but sensibility on the side of the sellers in terms of expectations, which creates more opportunities right. Because we're we're never won at least at this stage of our lives to to look to.

John Real: To overpay.

John Real: Two.

John Real: Bring on some inorganic growth.

John Real: The interest rate environment has been hanging a little higher were hoping that we'd be in a different place as of today, which would make.

John Real: That opportunity set stronger that's taken a little longer than.

John Real: Than we thought.

Ira Birns: But, you know, there are opportunities, there have been some, as an example, without any specificity, where over the course of a courtship, the sellers, the sellers facts and figures began to deteriorate, right? So we've seen some of that as well, which has put, you know, a potential deal or two on pause.

John Real: But there are opportunities there.

John Real: There have been some as an example, without any specificity where over the course of a courtship.

Speaker Change: The sellers.

Speaker Change: The sellers facts and figures began to deteriorate right. So we've seen some of that as well, which.

Speaker Change: Which is put.

Speaker Change: A potential deal or two on pause, but at the same time there are other opportunities that remain solid and we should be able to execute on.

Ira Birns: But at the same time, you know, there are other opportunities that remain solid, and we should be able to execute on something, I would say over the next 12 months. Thank you.

Speaker Change: On something I would say over the next 12 months.

Speaker Change: Thank you.

Michael Kasbar: I would now like to turn the conference back to Michael Kasbar for closing remarks, sir. Thanks, Ken, Ben, and John for the questions, Ira. Good job fielding all of those.

Speaker Change: Thank you I would now like to turn the conference back to Michael <unk> for closing remarks, Sir.

Speaker Change: Thanks, Ken Ben and John for the questions.

Speaker Change: Good job feeling all of those.

Michael Kasbar: I'm remote and out of the office. Look forward to talking to you next quarter. Can you hear me okay? Or am I not coming through? Yeah, okay, fine. Any case, yeah, I'm remote out of the office here. But thanks very much. Appreciate the support. We're highly focused on the agenda that we discussed a little over a year ago and look forward to reporting back to you next quarter.

Remote data the office look forward too.

Speaker Change: Good talking to you next quarter can you hear me, okay, or it might not coming through yes, okay fine.

Speaker Change: In any case, yes, I'm remote out of the office here, but thanks very much I. Appreciate the support we are highly focused on the agenda.

Speaker Change: That we discussed a little over a year ago and.

Michael Kasbar: Take care and stay well.

Speaker Change: Look forward to reporting back to you next quarter take care and stay well.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yes.

Yes.

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Speaker Change: Okay.

Speaker Change: [music].