World Fuel Services CEO Discusses Q3 2010 Results – Earnings Call Transcript
World Fuel Services Corporation (
)
Q3 2010 Earnings Call Transcript
November 2, 2010 5:00 pm ET
Executives
Frank Shea – EVP & Chief Risk and Administrative Officer
Paul Stebbins – Chairman & CEO
Ira Birns – EVP & CFO
Michael Kasbar – President & COO
Analysts
John Chappell – JPMorgan
George Pickral – Stephens Inc.
Gregory Lewis – Credit Suisse
Ken Hoexter – Merrill Lynch
Kevin Sterling – BB&T Capital Markets
Steve Ferazani – Sidoti & Capital
Edward Hemmelgarn – Shaker Investments
Presentation
Operator
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World Fuel Services Corp. Q2 2010 Earnings Call Transcript
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World Fuel Services Corp. Q1 2009 Earnings Call Transcript
Good evening everyone. At this time, I would like to welcome everyone to the World Fuel Services 2010 third quarter earnings call. My name is Russell and I will be your event specialist today. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. Instructions on how to ask a question will be given at the beginning of the Q&A session. It is now my pleasure to turn the webcast over to your speaker Frank Shea, Executive Vice President and Chief Risk and Administrative Officer. Mr. Shea you may begin your conference.
Frank Shea
Good evening, everyone and welcome to the World Fuel Services third quarter 2010 conference call. I am Frank Shea, EVP and Chief Risk and Administrative Officer and I am doing the introductions on this evenings call, with as we have been doing in recent quarters a live slide presentation. The call is also available via webcast. To access this webcast or future webcasts please visit our website www.wfscorp.com and click on the website icon.
With us on the call today are Paul Stebbins, Chairman and Chief Executive Officer, Michael Kasbar, President and Chief Operating Officer, Ira Birns, Executive Vice President and Chief Financial Officer, and Paul Nobel, Senior Vice President and Chief Accounting Officer. By now, you should have all received a copy of our earnings release, if not, you can access the release on our website.
Before we get started, I would like to review World Fuel's Safe Harbor statement. Any statements made or discussed today that do not constitute or are not historical facts, particularly comments regarding World Fuel's future plans and expected performance are forward-looking statements, that are based on assumptions that management believes are reasonable but are subject to a range of uncertainties and risks that could cause World Fuel’s actual results to differ materially from the forward looking information. The summary of some of the risk factors that could cause results to materially differ from our projections can be found in our form 10-K for the year ended December 31 2009 and other reports filed with the Securities and Exchange Commission. We will begin with several minutes of prepared remarks which will then be followed by a question-and-answer period.
At this time I would like to introduce our Chairman and Chief Executive Officer, Paul Stebbins.
Paul Stebbins
Thank you, Frank. Good afternoon and thank you for joining us. Today we announced earnings of $36.8 million or $0.60 per diluted share for the third quarter of fiscal 2010. We are pleased with these strong results which reflect our inability to continue to execute well, despite a persistently uncertain global economic environment. In Q3, we achieved a number of key milestones. Number one, in July we completed the acquisition of Lakeside oil based in Milwaukee Wisconsin, adding 350 million gallons to our domestic wholesale land business. Number two, in August we announced our agreement to purchase Western Petroleum in Eden Prairie Minnesota. Western will add more than 500 million gallons of land-based fuel growing our land segment to a current annual run rate of 2 billion gallons. It would also add approximately 100 million gallons of jet fuel to our general aviation business and will diversify our business activity into propane, lubricants, ethanol and railcar logistics. We completed this acquisition in early October. Number three, in September we expanded the size of our revolving credit facility and successfully completed our secondary equity offering, which increased our total available liquidity to more than $1 billion.
We continued to deliver strong performance in what remained a very choppy market and our better positioned than ever to take advantage of additional strategic opportunities. In our marine segment, the shipping industry was still in search of a more stabilized global trade environment. And this was reflected in lower results quarter-over-quarter. We attribute this to generally soft demand, as concerns about the current market direction, persists across all segment in the shipping industry. In the near term, we will continue to focus on driving overall gross profits and good risk-adjusted returns. Looking forward, it is clear that despite the lagging economic recovery in the US and Europe as well as fluctuation in rates and capacity, shipping remains an integral part of global trade. And the long term outlook's suggests continued robust growth in the emerging market for years to come. We remain confident that our strategy, providing a high level of service to major global fleets with the staying power to whether the uncertain market conditions will continue to produce solid results for the company.
Our aviation segment delivered another record quarter in volume and gross profit. As we remain focused on risk management, we have continued to pursue lower risks, lower margin customer engagements and this was the principal driver of our sequential growth in volume this quarter. We have been successful in opening up new markets and competing for market share with a broader spectrum of customer. In addition to our continued growth in the commercial markets, we have by virtual by acquisition or Western petroleum entered the branded fuel market in the business aviation sector. Western petroleum is the exclusive US distributor off Exxon Mobile products in the branded fix-based operator market as well as a distributor of ConocoPhillips product, serving a total of 100 FBO’s, 180 FBO’s at general aviation locations around the country. This is a good complement to our existing un-branded sales in this phase and we see continued opportunities to grow our segment in both the branded and unbranded FBO markets. Overall, I added a report that industry conditions have significantly improved year over year in the aviation industry. Whether or not the recovery is sustainable will in part depend on the pace of the economic recovery and capacity discipline in the industry. We remain focused on our core strategy, driving value by expanding supplies at a growing number of domestic and international locations. In our land fuel space, we are very pleased with the addition of Lakeside oil and Western petroleum to our business. Lakeside is making a good contribution to our branded supply initiatives and Western has fortified our position in the unbranded stage. Western is also active in propane, lubricants, ethanol and railcar logistics, all of which represent significant growth opportunities and our businesses which will benefit from our strong balance sheets and liquidity position. We are also pleased that Western brings with it a talented team of dedicated professionals whose strong culture and passion to the business have already begun to have a meaningful impact on strategy and execution in our Land and Aviation segments.
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