World Kinect Corp (WKC) 2018 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the World Fuel Services 2018 Second Quarter Earnings Conference Call. My name is George, and I will be coordinating the call this evening. (Operator Instructions) As a reminder, this conference is being recorded Thursday, July 26, 2018.

I would now like to turn the conference over to Mr. Glenn Klevitz, World Fuel's Vice President, Assistant Treasurer and Investor Relations. Mr. Klevitz, you may begin your conference.

Thank you, George. Good evening, everyone, and welcome to the World Fuel Services Second Quarter 2018 Earnings Conference Call. I'm Glenn Klevitz, and I'll be doing the introductions on this evening's call alongside our live slide presentation. This call is also available via webcast. To access this webcast or future webcasts, please visit the World Fuel Services website, and click on the webcast icon. With us on the call today are Michael Kasbar, Chairman and Chief Executive Officer; and Ira Birns, Executive Vice President and Chief Financial Officer. By now, you should have all received a copy of our earnings release. If not, you can access the release on our website.

Before I get started, I'd like to review World Fuel's safe harbor statement. Certain statements made today, including comments about World Fuel's expectations regarding future plans and performance are forward-looking statements that are subject to a range of uncertainties and risks that could cause World Fuel's actual results to materially differ from the forward-looking information. A description of the risk factors that could cause results to materially differ from these projections can be found on World Fuel's most recent Form 10-K and other reports filed with the Securities and Exchange Commission.

World Fuel assumes no obligation to revise or publicly release the results of any revisions to these forward-looking statements in light of new information or future events. This presentation also includes certain non-GAAP financial measures as defined in Regulation G. A reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures is included in World Fuel's press release and can be found on its website. We'll begin with several minutes of prepared remarks, which will then be followed by a question-and-answer period. As with prior conference calls, we ask that members of the media and individual private investors on the line participate in listen-only mode.

At this time, I would like to introduce our Chairman and Chief Executive Officer, Michael Kasbar.

Thank you, Glenn, and good afternoon, everyone. Thank you for joining us today. Overall, we had a good quarter and have continued to stay the course that I outlined at the beginning of the year, focusing on our 3 pillars; continuous cost management, sharpening our portfolio and aggressive organic growth.

Ira will walk us through the financials, then I will provide some additional commentary before we begin Q&A.

Thank you, Mike, and good evening, everyone. Our business performed well in the second quarter posting record gross profit, improved operating leverage and strong growth in EBITDA.

We also reduced our net debt-to-EBITDA ratio below 2x. However, a sharp increase in our effective tax rate post-tax reform, negatively impacted our after-tax results. I'll share more details regarding these items as I review my prepared remarks.

Adjusted net income was $32 million in the second quarter, that's down $2.5 million when compared to the second quarter of last year and adjusted diluted earnings per share was $0.47 in the second quarter, down $0.03 from last year.

Consolidated revenue for the second quarter was $10.2 billion, up $2 billion or 26% compared to the second quarter of 2017. Again, this was principally due to the significant increase in fuel prices compared to the second quarter of last year.

WTI, which reached a high of $77 per barrel during the quarter averaged $68 a barrel, an increase of $20 or 41% year-over-year. The pricing impacts were offset in part by lower volume in the marine and land segments.

Speaking of volume, while marine and land volumes were down year-over-year, our aviation segment volume was up approximately 60 million gallons or 3% year-over-year to 2.1 billion gallons. Strong volume growth in our European core resale operations was the principal driver of the positive year-over-year volume growth.

Volume in the marine segment this second quarter was 5.9 million metric tons, down approximately 900,000 metric tons or 13% year-over-year. The largest driver of the volume reduction relates to our decision to exit certain lower churn activities over the past year, which we've spoken about during the past few quarters.

Marine segment volume was actually up 2% sequentially, principally driven by increased volume in our core back-to-back activity.

Our land segment volume was 1.4 billion gallons during the second quarter, down approximately 40 million gallons or 3% compared to the second quarter of 2017. The decline in land segment volume was principally related to our decision to exit certain business activities in North America, which were not meeting our return expectations. This was offset in part by growth in our Kinect branded natural gas and power operations.

Total consolidated volume for the second quarter was 5.1 billion gallons, a decrease of approximately 200 million gallons or 4% year-over-year.

Before I continue with the core financial review, I would like to review all the nonoperational items highlighted on our earnings release.

Please note that the following figures exclude $3.6 million of pretax nonoperational expenses in the second quarter as well as nonoperational items in periods previously reported as highlighted in our earnings release.

The nonoperational expenses are principally comprised with severance cost relating to our ongoing restructuring activities. To assist all of you in reconciling results published in our earnings release and 10-Q, the breakdown of the $3.6 million of nonoperational expenses can found on our website on the last slide of today's webcast presentation.

Consolidated gross profit in the second quarter was a record $247 million. That's an increase of $16 million or 7% compared to the second quarter of last year.

Our aviation segment also contributed record $127 million of gross profit in the second quarter. That's an increase also of $16 million or 15% compared to the second quarter of 2017.

Year-over-year, the increases in aviation gross profit were principally the result of continued strength in our government business and from international core resale operations.

As we look to the third quarter, we expect seasonal sequential increases in our core resale business as well as our [on] airport international fueling operations, which should be the principal drivers of stronger aviation results in the third quarter.

The marine segment generated second quarter gross profit of $30 million. That's down $3 million or 8% year-over-year. The year-over-year gross profit decline was principally driven by our decision to exit certain parts of our business. This decline was entirely offset by additional marine cost-reduction initiatives over the past year. Looking ahead to the third quarter, we expect the Marine business to generate a similar outcome to this past quarter's results.

Our land segment delivered gross profit of $89 million in the second quarter, an increase of $2 million or 2% year-over-year. When compared to last year, the principal drivers of the increase were the organic growth in our Multi Service payment solutions business as well as continued expansion in Kinect. This was partially offset by a decline in parts of our retail operations, including the impact of a divestiture of certain C-Store operations in late 2017.

Gross profit associated with our Multi Service payment solutions business was $18.3 million in the second quarter. That's an increase of 30% compared to the second quarter of last year, validating our strategy in our global FinTech payments business.

Third quarter's land results in the land segment are expected to increase modestly aided in part by continued cost management initiatives.

Operating expenses in the second quarter, excluding our provision for bad debt and nonoperational items were $180 million. That's up $7 million year-over-year but flat sequentially.

For the first half of the year, operating expenses excluding bad debt and nonoperational items as a percentage of total gross profit was 73.3% compared to 75% in the first half of 2017.

This 170 basis point reduction is a direct result of our cost management efforts and portfolio rationalization, putting us more than halfway through our target of a 250 basis point reduction in 2018.

In the third quarter, we expect operating expenses, excluding bad debt and nonoperational items, to be in a range of $176 million to $180 million, down slightly on a sequential basis.

Consolidated income from operations for the second quarter was $65 million, that's up $8 million or 14% year-over-year, again reflecting solid gross profit performance as well as the continuing benefit of our cost management programs.

Adjusted EBITDA was $84 million in the second quarter, up $7 million or 8% from the second quarter of 2017.

Nonoperating expenses, which is principally comprised of interest expense for the second quarter, were $19 million. This represented an increase of $3 million compared to the second quarter of 2017, principally related to higher average borrowings, due to the sharp increase in fuel prices as well as higher interest rates compared to last year. I would assume interest expense should be in a range of $17 million to $19 million for the third quarter.

Our effective tax rate in the second quarter was 28.8%, up significantly from the second quarter of last year principally as a result of tax reform. Our second quarter rate was higher than expected going into the quarter. And we have therefore adjusted our forecasted rate for the full year to be in the mid-to-upper 20s. We continue to focus on opportunities which will allow us to bring our effective tax rate down over time.

Our total accounts receivable balance was just under $3 billion at quarter end, an increase of approximately $300 million year-over-year, driven by higher fuel prices.

Cash flow generated from operating activities was $300,000 for the second quarter. This reflects the impact of a change in classification of $121.8 million of cash proceeds received from the beneficial interest in receivables sold from cash flow from operating activities to cash flow from investing activities due to a recently adopted accounting standard.

Despite a significant increase in fuel prices during the quarter, we did a good job managing working capital by further portfolio rationalization, the reduction of days of inventory on hand and increased activity under our accounts receivables sales program. All contributing to a reduction of net debt to EBITDA to 1.9x.

We are in the process of amending our core receivable sales facility, which should meaningfully reduce the impact of a newly adopted statement of cash flows standard in the third quarter. And hopefully eliminate any impact at all by the fourth quarter of this year. We remain focused on driving strong cash flow for the full year, despite higher fuel prices.

So in closing, before I turn it back over to Mike, while we're still not exactly where we want to be, we did deliver good results this quarter with record consolidated gross profit and record gross profit in our aviation business.

Our operating leverage is improving. Our level of EBITDA is steadily increasing, and we continue to effectively manage our balance sheet.

So we're moving in the right direction, and have increasing confidence in our ability to drive meaningful improvement in our financial performance, delivering greater value to our shareholders going forward.

I'd now like to turn the call back over to Mike for some additional commentary.

Thank you, Ira. This quarter's results were a demonstration of the fact that we are executing on our strategy of reducing our exposure to volatile profit streams in favor of satisfying durable end user demand in order to deliver more predictable financial results.

We continue to exit business activities that generate low or highly variable economic value and free up capital to invest in activities with ratable recurring revenue and an adequate return. The result of that, in short, is that we continue to rationalize our portfolio accordingly. We are maintaining our focus on lowering operating cost and this is manifested in our improved OpEx ratio to which Ira already referred in his comments.

This improvement in operating leverage was achieved despite the fact that we continue to invest in automation and technology, most notably in land, which will ultimately lower cost and improve scalability.

The third pillar of our value creation strategy is aggressive organic growth. Aviation is the best example of our ability to grow organically because we have effectively positioned it with the most durable value proposition. Leveraging our investment in international distribution assets, we continue to expand our global network to provide customers with the most cost-effective and reliable supply solutions. Not only did fuel volume continue to grow sequentially and versus prior year, but we continue to grow our nonfuel service offerings, which complement our supply solutions.

Marine is a perfect example of the manner in which we are sharpening our portfolio and driving cost discipline. We are all acutely aware of the challenges faced by the marine industry over the past couple of years. We've consciously exited activities of the Marine space which did not create value. In spite of the decline in volume versus the comparable quarter last year, our marine segment delivered the same operating income as they did in the prior year, driven by further cost and portfolio rationalization over the past year.

Our land segment has and continues to focus on rationalizing its portfolio. We previously spoke to you about our decision to exit certain short-term trading activities, which not only consumed a significant amount of working capital but contributed historically to earnings volatility. Our land segment continues to reorient its activities towards supply more durable, sustainable end user demand. Land is primarily focused on driving operational excellence and is investing in technology solutions that will improve both the customer experience and our operating cost ratios. While still masked by the loss of gross profit in rationalizing the portfolio and investments in technology, we are seeing healthy organic growth in our land, commercial end user business activity.

Multi Service achieved very strong growth year-over-year and we continue to be very optimistic about the growth trajectory in our FinTech business.

And finally, Kinect Energy Group, our emerging global gas and power advisory and fulfillment business has begun contributing operating profit as I'd previously stated and as I previously stated, we expect it to contribute more meaningful results over the course of 2019. The Kinect business will ultimately link all of our gas and power solutions online to a growing segment of commercial, industrial and governmental customers, increasingly looking to gain control of their energy cost and achieve their sustainability objectives. As always, I am passionate and enthusiastic about our business. It has been a journey to build and the recent transitions have not always been pleasant, but I feel like we are breaking into stride once again. There is no other company like World Fuel which makes us sometimes difficult to follow. But I believe it is what also gives us great value creation potential.

Before I go into Q&A, I truly want to thank the over 5,000 dedicated and talented professionals in World Fuel that everyday enable integrated energy solutions and global commerce. It's amazing what you make happen every day. And I also want to thank our long-term shareholders who have believed in the vision. We appreciate your support.

Operator, please let's begin the Q&A session.

(Operator Instructions) Our first question comes from the line of Ken Hoexter with Merrill Lynch.

Just if you maybe step back, I think, Ira, I want to hit on something you said, now that the cost program is kind of fully rolled in. Normally, you have second half cost, it looks like they typically go up. But you mentioned you're seeing a decline down to 176 to 180. A, did I catch that right? And is that -- is this the full run rate of your cost program? Or is there more room to run after this?

I very clearly got the first half of your question. Hopefully, I'll answer the second half well. So look, we're very focused more than ever on being more efficient from a cost standpoint. So you're right. Historically, you'll probably see cost going up in the seasonally stronger third quarter. We're trying to buck that trend, right? We're trying very hard this year to drop almost all of our incremental gross profit that we generate to the operating income line, right? Meaning, trying to get as close as possible to keeping last year's expense number in line with this year. So very little growth in expenses despite some reasonable growth on the GP side. And that's despite a couple of small acquisitions, that despite having a better year and more incentive compensation, so we're making more progress than I would say we ever have before in finding ways to be more efficient. And we're going to continue to do so. So that $180 million this quarter should drop a little bit and should stay in that range as we head into the fourth quarter and that should contribute to that 250 basis point reduction in our expense ratio that we projected earlier in the year. Hopefully, we can even beat that, right? So as we get into '19, we're not giving up, right? We're going to continue to focus on the cost side and continue to try to find additional efficiencies, there's a lot of additional opportunities over time on both the corporate side and the land business in particular. And there's a tremendous amount of focus internally to get those efficiencies over time. So we're doing better and we think we're going to keep driving that operating expense ratio in the right direction in generating more operating leverage. And we'll keep updating all of you every quarter on our progress.

Okay, and then for my second one. Normally, when fuel goes up, you have a bigger accounts receivable as you extend the credit. It sounded like you were trying to do some things to work around that to generate more cash despite the pull on -- I guess what your balance sheet can -- can you maybe walk through how you can achieve that? And why it can be different this time?

Yes, look, we're -- the last question was on expenses. We're extremely focused on the expense side as I just described. But we're also very, very focused on the cash flow side and next rate cycle. And receivables, payables and inventory, we improved inventory turns this quarter. On the receivable side, we're managing that as tightly as possible. We're also taking advantage of one of the tools that we talked about that we've used successfully over time in terms of our accounts receivable sales program to effectively improve cash flow at a very, very low cost of capital and provide us opportunities to get better returns on certain transactions that we otherwise would get if we were keeping those receivables on the balance sheet. So it's a combination of many things. We got our net trade cycle down this quarter to 8.7 days. It's lowest it's been in a while. It's been generally hanging out over 10 days. So it's inventory. It's receivables and even a little bit of activity on the payable side. So we're working all 3 of those levers to improve our working capital position. So a good point that our overall working capital did not grow despite the significant increase in fuel prices on a sequential basis. And that's relating to a lot of hard work of some of those 5,000 people that Mike was referring to a couple moments ago.

All right, great. And I guess for my then follow-up question, the land business -- the gross profit was down sequentially despite the fuel price uptick. I would imagine that as fuel prices is going up, it would be easier for you to maintain that gross profit margin per gallon. Is that -- am I not reading that right? Or is there something else in land? You gave a great rundown in the aviation mix but maybe is there something in land too?

Sure, Ken. Remember, there's a lot of seasonality in land coming out of the U.K. So we had a very strong quarter in Q1 because they had the coldest winter we've seen there for a first quarter in several years. So that -- you see that falling off in the second quarter and that's probably the biggest variance that's moving in that direction. And we had a pick up on the Multi Service side of the business, we had a pick up on the Kinect side of the business. And that generated the net result that we delivered this quarter.

I think I'll add a little bit more color there on both the cost, the cash and the gross profit. As we're repositioning the whole company in a number of different ways and rationalizing the portfolio, we're going to see some improvements in cost as well as freeing up some cash in terms of moving out some of the inventory, but there is going to be some intermediate impact on gross profit as we do the shift of the mix. But we're confident that as that settles in, we'll start to see a more normalized margin that should be comparable to our other businesses within the land segment. But there is a lot of work being done at the time, but we are seeing, as I made in my comments -- as I commented, some improvement within that ratable organic end-user business.

Our next question is from the line of Ben Nolan, he's with Stifel.

So maybe just to follow up on Ken's question a little bit as it relates to actually the net margins. When I look at it, even relative to Marine, which I think is pretty clearly depressed from a cyclical standpoint, the land side is still a little lower. Even seasonally adjusted, 20% net margins is a function of the gross profit or below, whereas the other ones are a bit higher than that. Is there something structural to the land side where it's just those net margins are going to be lower? Or is that an area -- could it ultimately rise to a 30% or 40% or something more similar to what you'd see in the aviation side for instance?

So great question, Ben. So for starters, one thing you have to recognize is a lot of moving parts in land. Most of the Multi Service business sits in land. And we've got the U.K. operations and our retail business, our Kinect business and our commercial/industrial platform and more, right? But overall -- so if you take Multi Service, different business model tends to run at a higher operating expense ratio than the core. So there's some impact there that while we're working that number down, we'll always be a bit higher than the core land business. But even if you look at the core land business, we're not where we want to be. We're not where we need to be. That's a subject of historical acquisitions that haven't been fully integrated and we haven't been able to take all the cost out that we need to, to get them to the point where, yes, we should be able to arrive at, which is a number significantly better than the 20% that you mentioned. I would say, easily another 10 percentage points better than that, right? And that's what we're achieving -- we're looking to achieve over the longer term, right? It's not going to happen tomorrow but there's a lot of upside in improving operating leverage in land. And that's an area of significant focus as well. So I talked about expenses in general before, I talked about the balance sheet. But that may be -- the land focus may be number one, trumping those two. So there's a all -- full core press on the technology side and the people side. And clearly, when we talk about the 250 basis points additional improvement next year, a lot of that is expected to be related to land. So hopefully, as we get into '19, we'll be able to show all of you that, that number will start improving and becoming more in line with the other businesses that have a lot more years of experience and maturity behind them.

I appreciate that, it's great color, Ira. And I guess my next question or my follow on question, it relates to -- at this point, we're 18 months away from the implementation of these IMO low-sulfur regulations. And I know it's causing quite a stir in a number of areas, certainly in the shipping market, but also in refineries and so forth. And there's a lot of questions as to whether or not there's going to be the right types of fuel in various places around the world, and high sulfur versus low sulfur versus blends and everything else. I'm curious if you guys can add or have any updated thoughts on where you sit in relation to that potential logistics challenge, I would say, for the industry and to me at least, seems like an opportunity. But curious if you can maybe even quantify or at least frame in what that opportunity might look like. And also, maybe if there are risks associated to it for you guys?

So for me, Ben, this is a bit of a sentimental journey. Sort of combining a lot of the tasks with some interesting aspects of the current -- future market. So sourcing of product is certainly going to be a little bit more involved in terms of the distillate, in terms of blended fuels, compliant fuels, in terms of high sulfur for those with scrubbers or LNG. And as I've said numerous times in the past, we're very well-positioned by virtue of our land space in terms of sourcing distillate and certainly our logistics capability in distillates not only within our land business, but also within our jet fuel because there's some similarities there. In terms of blending, we've got good capabilities there. Certainly there's going to be some technical aspects there. We've got significant technical capability. There's going to be some specialty lubes. We understand that business. We're in that business. So I think we're extremely well positioned. You are going to see an average higher price which is going to, I think, create some stress in terms of credit. So I think by and large, it's going to be generally favorable to our positioning and the market will sort itself out. It always does. You are going to see groups of individuals that will start to collect with some of the major suppliers and major locations, so that's nothing new. But I think that we're in an excellent position to benefit from that. And also, to provide the marketplace both buyers and sellers with solutions. There's going to be some credit issues, without question, but that's fine. We understand that extremely well. So by and large, I think, we're in a good position. So it should generally be advantageous to us because people are going to require more assistance, and we're in a position to go with that.

That's great, Mike. And I guess this would be the follow up. Have you ever seen anything like this before? And if so, what did it do to the business? Or what value were you able to extrapolate out of it?

When -- I mean, this is going back to what was called the first bunker crisis when you started to see secondary and tertiary refining with ships that were designed to burn straight from fuel oil. And you were having cap fines and all contaminants in the fuel chain with debunkering and having to deal with those issues. And we were actually well-positioned because we understood it pretty well. We knew how to resolve those issues. It wasn't on the scale of this. So it's really what I was saying, it's a sentimental journey. Back in the day, the intermediary had capability to source a somewhat complicated market. The market has become extremely efficient. So now you're going to get to a level of inefficiency, which is going to require people to be more thoughtful and to prepare their bunkering programs in advance. And to be using different people to deal with logistics. In some places, fuel isn't going to be there. So there is going to be a significant amount of provisioning. But in terms of comparison on this scale, not so much. In land, you'd had different regulations coming in, in reformulated gasoline, and the domestic industry here responded extremely well with some of the new regulations, really, a complement to our energy industry but not an exact comparison.

That's great. So you'd expect probably to gain some share and see some margin gains out of this, is that a good synopsis?

I think so. Yes, I mean, I think so. We're gaining share in our aviation business simply because we have fantastic platform and I believe that will start to see, once we get a couple of things sorted out, with more focus on the portfolio, putting more wood behind fewer errors, you're going to start to see some share growth and volume growth and I said that on my last call, once we get a little bit more underway. So certainly, I believe that we're well-positioned on the marine side.

Our next question comes from the line of Kevin Sterling with Seaport Global Securities.

So you guys are talking about -- congratulations on the quarter, by the way. You talked about improved operating performance and things we'd -- heading -- even heading into 2019. Is that EBITDA, operating income, EPS, and all of the above? How should we think about that when you highlight improved operating performance for next year?

I would think of it as all of the above. EBITDA and down to the EPS line. Unless there's more tax reform, which is obviously placed for -- it's on the EPS line this year, right? But yes, I mean we're looking to continue driving EBITDA. As I said in our release, this is the fifth consecutive quarter of year-over-year EBITDA growth. We want to keep that going through many of the initiatives that we had got going on within the organization from a growth perspective and also from the efficiency initiatives that we're driving. So if we continue to do that well, and I think we're getting into a groove where we're doing a lot better as an organization. Yes, all of those should be improving in 2019.

Got you, okay. No, that makes sense. Then just kind of sticking with that, I think you kind of indicated to us, we should think about Marine in Q3 similar to Q2. When do you -- if you had your crystal ball, when do you anticipate we're seeing a basic -- finally see a sequential improvement in marine? Is it early '19 or maybe even Q4? How should we think about that?

We saw a sequential improvement this quarter. So it's hard to say. They're bouncing around at a pretty tight trading range in the discussion that Mike just had with Ben. Would probably -- one of the more likely opportunities, to see more meaningful pickup as we get closer to 2020. We have a little bit of seasonality that we have in the Marine business, positive seasonality in the summer. But I don't think that's going to generate a number much different than Q2, but the team's done a great job considering everything that they're facing in declining volumes and GP that's down a bit. Our margins are up a little bit and, again, all the cost that we've driven out of that business has allowed us to continue delivering operating income in a pretty consistent range. But we'd be a bit aggressive to project any significant change sequentially or year-over-year in the near future, I would say.

I think the only color that I would add to that then, this is also going back to the 2019 EBITDA and EPS question, is just the focus and the efficiency of the organization. So the cost side of the equation becoming a continuous cost management culture and really focusing on the portfolio, I think is going to produce good outcomes for the company. Sort of interesting, similar to the aviation segment where you see cost discipline. You're looking at just technology on oil extraction, the whole notion of cost efficiency is just a current reality today. So you will ultimately see some stabilization come in to both energy and transportation. And we're doing the same thing, so it's reasonable to believe that there will be this confluence of our scalability and efficiency, the market settling down a little bit, where you could start to see our value proposition creating greater value share in the marketplace. So that's certainly what we're focused on.

Yes, okay, and lastly, kind of what you're focused on cash and free cash flow generation? How should we think about the priorities for that kind of this level with kind of maybe stock buyback, to be at the top of the list? Or I'm sure you continue to look at M&A opportunities and reinvesting in the business. But kind of given where your stock is with your free cash flow generation, would you look at maybe ramp up buyback?

Again, great question, Kevin. Look, we've got a lot of choices to allocate our capital. Supporting organic growth; as you mentioned, acquisition opportunities, and we also focus on needs that could arise in a more rapidly rising fuel price environment, right? So that's something we always have to keep an eye on. And of course, buybacks is always on the list as a consideration. So we try to be relatively consistent year-over-year in terms of buying back a reasonable amount of shares to, at a minimum, keep our share count steady. And we'll continue to do that over the long term. When we do it is generally dependent upon a lot of factors. Again, it's part of capital allocation, right? Where are we best served using our very valuable capital today or tomorrow or in next week or next month. So always a high consideration and when we do it, you guys will be the first to know, but we're still committed to buying back shares over the course of the year, as we have been in the past.

(Operator Instructions) Mr. Kasbar, there are no further questions at this time. I will now turn the call back to you for closing remarks.

Thank you so much for taking the time to listen to our quarterly results. We look forward to getting together next quarter. Thanks so much. Have a great day.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.