World Kinect Corp (WKC) 2021 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the World Fuel Services Second Quarter 2021 Earnings Conference Call. My name is May, and I will be coordinating the call this evening. (Operator Instructions) As a reminder, this conference is being recorded.

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

Thank you, May. Good evening, everyone, and welcome to the World Fuel Services Second Quarter 2021 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. And 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 in World Fuel's most recent Form 10-K and other reports filed with the Securities and Exchange Commission. World fuel assumes no obligation to revise or publicly release the results of any revisions to these forward-looking statements in light of new information or future events.

This presentation also includes certain non-GAAP financial measures as defined 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 will begin with several minutes of prepared remarks, which will then be followed by a question-and-answer period. As with prior conference calls, we ask that members of the media 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 thank you to everyone joining us today. As I mentioned last quarter, our organization continues to evolve within a fundamentally changed marketplace. We've made progress within the digital and energy transition and performed well within a constrained supply chain. The choppy start-stop reopening of markets and borders has added challenges. There is no historical analog for the dynamics we are experiencing.

Despite this, we have done an extraordinarily good job of managing risk and supporting our customers, suppliers and partners from cyber to driver shortage to credit risk and lockdowns, our team has done an exceptionally good job of supporting a very different market. And while conditions in many parts of the world remain fragile, our team again performed with both commercial and operational excellence in the second quarter, delivering solid results. I can't possibly thank our global team enough for their spectacular efforts over the past 1.5 years and look forward to finally reconnecting in person when we reopen our offices this fall.

International market continues to recover with North American commercial passenger activity now back to 80% of pre-pandemic levels, while international activity still is a longer way to a full recovery. I recently returned from Europe, but it's clear that its are getting busier and activity is picking up. So the prognosis for commercial passenger activity is clearly improving each quarter. At most of our 80 operated locations outside of the U.S., activity was substantially ahead of where we were a year ago.

Lastly, as were publicized in media, our government business in Afghanistan is generally coming to an end as most places have now been closed. I would like to specifically thank the hundreds of employees who have supported us in that region for the past 10 years. We expect some activity continue -- to continue, but this is expected to be modest. Those sectors within the marine industry are performing well. The container segment, especially buoyant, dry bulk is strong with tankers looking more positive over time and the cruise market slowly entering restart mode. So our marine business continues to perform well, we've been impacted by the lack of volatility and a corollary reduction in demand for our risk management offerings.

Our highly experienced marine team continues to build its logistics capabilities and add complementary services, which include sustainability offerings, leveraging our deep expertise within our World Connect business. Our land business continues to evolve with the growing emphasis on natural gas, power and sustainability-related services.

The pandemic's impact on our land business is less pronounced with volumes getting back to pre-COVID levels. Strong seasonal first quarter results in Europe continued into the first month of the second quarter, and our commercial and industrial and retail businesses all performed well during the quarter. We continue to gain traction in supporting our long-term fuel customers with our natural gas and power and growing suite of sustainability offerings.

On the technology front, our team continues to develop a broader suite of offerings to complement our core business activities. And while it's been a long haul, we are getting closer to completing the integration of our North America land operating platforms with one step in this process successfully completed in the second quarter. This integration will drive efficiencies and will facilitate more synergistic integrations in the future. I'm proud of the team's efforts in these areas, which are critical to our long-term success.

Finally, our balance sheet and liquidity profile remains strong. We remain poised to invest in organic growth as markets continue to recover and will be supplementing organic growth with strategic investments, which should accelerate our growth in our core businesses and drive increasing shareholder returns.

I'd like to turn the call over to Ira for a financial review.

Thank you, Michael. And good evening to everyone listening on the phone and on the webcast. Hoping you're all enjoying the summer, while continuing to stay safe and healthy. Our business continues to perform well in what remains a challenging operating environment, and I am proud of our people and all the great work we have done supporting our customers and managing our business through this extraordinary period in our lives.

We remain extremely engaged with our customers and suppliers and are proactively opting in support. And we are pleased to see that many of the markets we serve are showing increasing signs of improvement, others, including our aviation business in parts of Europe and Asia have been slower to recover. Meanwhile, we remain focused on enhancing our value proposition in all the markets we serve, and we're excited about the long-term prospects and opportunities that exist across our business.

Before I walk through our second quarter results, please note that the following figures exclude the impact of nonoperational items, as highlighted in our earnings release and the comparison periods exclude the operating results from the multi-service business that was sold at the end of the third quarter of last year. The nonoperational items principally relate to acquisition and divestiture, asset impairment and restructuring-related adjustments and expenses. To assist you in reconciling results published in our earnings release, the breakdown of the nonoperational items can be found on our website and on the last slide of today's webcast presentation.

Now let's begin with some of the second quarter highlights. Adjusted second quarter net income and earnings per share were 25 and $0.39 per share, respectively. Adjusted EBITDA for the second quarter was $60 million. Volume improved significantly as markets continue to recover with second quarter consolidated volume up 9% sequentially and 33% year-over-year. And lastly, generating $37 million of cash flow from operations during the second quarter and $500 million over the past 12 months, increasing our net cash position to more than $200 million, further strengthening our balance sheet.

And now I'll review our financial results in greater detail. Consolidated revenue for the second quarter was $7.1 billion, an increase of $1.1 billion or 19% sequentially and an increase of $3.9 billion or 126% compared to the second quarter of last year. The year-over-year increase is driven by the significant increase in volume across all of our operating segments as well as our 130% increase in average fuel prices compared to the second quarter of 2020.

Our aviation segment volume was 1.4 billion gallons in the second quarter, an increase of 230 million gallons or 20% sequentially and double the volume generated in the second quarter of last year. The volume increases both sequentially and year-over-year spanned our commercial passenger and business in general aviation businesses. Although we've continue to experience increased activity with overall segment volume at more than 60% of pre-pandemic levels. At this time, we remain optimistic about the second half of the year and beyond. However, uncertainty remains in many parts of the world where travel restrictions remain in place and delta variant cases have been increasing.

Regardless, we remain in close contact with our customers and suppliers and are ready to meet their needs across our global footprint. Volume in our marine segment for the second quarter was 4.6 million metric tons, an increase of 360,000 metric tons or 8% sequentially and an increase of nearly 600,000 metric tons or 15% year-over-year. Our land segment volume was 1.3 billion gallons or gallon equivalents during the second quarter, flat sequentially, but an increase of 120 million gallons or gallon equivalents of 10% year-over-year. The year-over-year volume increases in the land segment came from improvements in our retail, commercial and industrial and wholesale businesses in North America as well as continued growth in our Connect natural gas, power and brokerage businesses.

Consolidated volume for the second quarter was 3.9 billion gallons, an increase of 310 million gallons or 9% sequentially and an increase of 960 million gallons or 43% compared to the second quarter of 2020. Consolidated gross profit for the second quarter was $185 million, that's down 4% sequentially and 6% year-over-year.

Our aviation segment contributed $88 million of gross profit in the second quarter, an increase of 15% sequentially or a decline of 3% year-over-year. The year-over-year decline was driven by a reduction in our government-related activity in Afghanistan as a result of the ongoing military withdrawal, which should be substantially completed by the end of next month as well as declining margins principally related to a more normalized business mix as well as lower physical inventory profitability in our core aviation business when compared to the second quarter of last year. As we look ahead to the third quarter, we expect aviation gross profit to increase sequentially, driven principally by the continuing recovery in North America and international commercial passenger activity.

The land segment generated second quarter gross profit of $23 million, that's a decline of 11% sequentially and 39% year-over-year. The year-over-year decline is principally a result of lower profitability compared to the second quarter of last year, which benefited from volatility arising from the implementation of the IMO 2020 regulations as well as the impact of competitive market conditions during this past quarter, where price volatility was also limited. As we look ahead to the third quarter, we expect marine gross profit to increase modestly on a sequential basis based upon some quarter-to-date improvement in our core resale business activity.

As we look towards the -- as we look towards the latter part of the year and beyond, we expect cruise line activity to accelerate and should contribute incrementally to our financial results. Our land segment delivered gross profit of $74 million in the second quarter, a decline of 18% sequentially, but an increase of 8% year-over-year when excluding the profitability related to the multi-service business from last year's results. Sequentially, we experienced the traditional seasonal decline in our U.K. business as well as a decline in gross profit related to our business in Afghanistan.

Year-over-year gross profit in our North American retail and commercial and industrial businesses as well as our Connect business, all showed increases when compared to the second quarter of last year, demonstrating continued progress in growing our core land business activities. Connect's growth is reflective of our increasing focus on natural gas, power and a growing suite of sustainability solutions, and it now represents nearly 1/3 of land's overall gross profit.

Looking ahead to the third quarter, we anticipate land gross profit will be relatively flat on a year-over-year basis when excluding the results of multi-service. We continue to believe that our land segment has many opportunities for growth, both organically and through strategic investments, principally in our commercial and industrial and Connect businesses.

Core operating expenses, which exclude bad debt expense, were $147 million in the second quarter, which was in line with our guidance for the quarter as we continue to manage our controllable cost well. Looking ahead to the third quarter, operating expenses, excluding bad debt expense, should remain in the range of $146 million to $150 million. As previously discussed, our team has continued to do an excellent job managing our receivables portfolio throughout the pandemic, with more than 90% of our portfolio now current. Our team's efforts have been paying off with no leasing losses of any significance, compounded by successfully collecting certain high-risk receivables, which had been previously reserved for, this resulted in a credit to bad debt expense this quarter of approximately $1 million.

Adjusted income from operations for the second quarter was $39 million, that's down 7% sequentially, but up 17% year-over-year related to the segment activity that I mentioned earlier. Adjusted EBITDA for the second quarter was $60 million, down 3% sequentially, but up 11% compared to last year. Second quarter interest expense was $10 million. That's flat year-over-year as total interest expense continues to benefit from low average borrowings as well as low rates, and we get into the quarter with no borrowings on our revolving credit facility and in a net cash position, again, in excess of $200 million. We expect interest expense for the third quarter to be approximately $9 million to $11 million.

Our adjusted effective tax rate for the quarter was 10.3%, which is significantly lower than our tax rate in the second quarter of 2020 and relate in the previously forecast for this year's second quarter. As a result of certain business initiatives, we recently updated our forecasted global jurisdictional income mix, which significantly reduced our second quarter tax rate. Furthermore, we also had a discrete tax benefit relating to a change in the U.K. statutory tax rate that was announced during the second quarter.

In a nutshell, our second quarter tax rate was much lower than forecast for the reasons just explained, but the forecast of changes in income mix will also contribute to a lower tax rate compared to where we started the year with our tax rate for the second half of the year now expected to be in the range of 29% to 33%. Our total accounts receivable balance increased to approximately $1.8 billion at quarter end, principally related to the increase in volume in our aviation and marine segments as well as the sequential rise in average fuel prices. We remain focused on managing our working capital requirements, which resulted in operating cash flow generation of $37 million during the second quarter, again, despite a 14% sequential increase in prices and a 9% increase in volume. This further strengthened our balance sheet.

In closing, in the face of continued travel restrictions in many parts of the world, our business continues to recover, delivering solid results this past quarter. And despite rising prices and increasing volumes, we again generated healthy operating cash flow, which now aggregates to nearly $750 million over the past 6 quarters. As noted many times in the past, this cash flow supports our balance sheet with significant liquidity to grow our business organically as the recovery continues and inorganically as strategic opportunities arise.

Yes, our business has been meaningfully impacted by the pandemic through its effects on the needs of many of our customers we serve throughout the world. But our results have also shown on resiliency, evidenced by our ability to manage expenses prudently, manage our balance sheet extraordinarily well and maintaining and growing relationships with our customers during this unprecedented time period. We believe these relationships in our global platform, which combines our liquid fuel offerings with natural gas and power with a broad portfolio of services and a growing suite of sustainability solutions will serve us very well as the recovery in global markets accelerates. Thank you once again for your continuing support.

And I will now turn the call over to May, our operator, to facilitate the question-and-answer session. Thank you.

(Operator Instructions) We have our first question from the line of Ben Nolan with Stifel.

So I guess I will start with my first question. You'd mentioned specific to aviation and the land side that there was a little bit of a negative impact from the wind down of operations in Afghanistan, and that will be concluded here in a month or so. Relative to, let's say, 2Q or maybe the proportion of, I don't know, let's call it, EBITDA or income from operations in the third quarter, how much how much of that is left to go away, would you say?

The best way -- Ben, it's Ira. Best we describe it to be consistent with the past. In the second quarter, it still represented 7% to 8% of our consolidated gross profit. Obviously, larger piece of aviation. But on a consolidated gross profit, it was about 7% to 8% it will probably remain in that ballpark, give or take, maybe 1% or 2% in the third quarter. And then after that, it's possible that a little bit will remain, but it will be an extremely small number as one location apparently will continue to operate indefinitely. So 7%, 8% in Q2, likely a similar number in Q3 there's been a lot of activity around the final exits. And then once we get to Q4, you're talking maybe a couple of million dollars a quarter, that would continue from a gross profit standpoint.

Perfect. That's great detail. I appreciate that, Ira. And then as my second question, Mike, you had mentioned at the end of your remarks there that you guys were sort of at the final stages of some land integration and that it's finally getting to the place where you want it to be. I was hoping -- and I guess there's a little bit more to do on that. I was hoping, what all does that integration entail? I mean, what all are we actually talking about here? And then on a go-forward basis, is it possible to quantify what that might do financially for the company?

Ben, it's -- we've taken a aggressive and I think forward approach to technology and a digital approach to our land business, really all of our businesses, somewhere between Q2 and Q3 will be 100% cloud base where we would have shut down in all of our data centers. So we've taken an aggressive approach to technology. And the U.S. businesses, we had 3 regions or East West and Central. And we will be consolidating those on a singular platform or series of platforms that we'll be able to interoperate. So the ability to now handle national accounts and be able to get the cost reduction as well as the ability for all of those localized businesses because they're our local and regional businesses.

So the vision was really to cover the 48 states. And to do that with our own logistics and inventory as well as third-party logistics and inventory, we believe that, that's going to give us a significant advantage in the marketplace and allow us to give a seamless service level. And we've got national accounts, getting a lot of consolidation. They want to have a single counterparty that's going to deliver them a level of service, be able to leverage their volume. We're integrating operationally with these clients through very advanced digital portals. So it goes on and on. The economic side of it, we're expecting to get some amount of efficiencies and cost efficiencies. Some of those, obviously, we'll share with our clientele, and some of those we'll keep. It will give us scalability. And certainly, as it relates to future acquisitions will be able to, hopefully, take EBITDA and have that drop to the bottom line. So that was the reason of it, fairly ambitious. And so hopefully, that gives you enough color on that.

Yes. I appreciate it. And then let's call this the follow-up question, although it's admittedly unrelated. I think, Ira, you mentioned that the net cash position was $200 million. Shares have kind of been hanging out in the range here in the low-ish 30s. At what point do you flip to solution decide to activate a buyback program here?

As we've -- I'm smiling you say that because as we've addressed this question many times, I think we've definitely become more buyback friendly over time. We'll probably never going to buyback enough shares to make most of you guys as happy as you possibly could be. But that's something that's always top of mind for us each and every quarter. And we're not necessarily getting up in the market every day. But I think we've demonstrated over the past several years that we've been fairly actively repurchasing our shares to at a minimum cover our -- the dilutive impact of employee equity-related awards and more, we did a good bit more than that last year. We'll almost certainly have some activity in 2021. But we also want to preserve as much capital as we can for growth, right, and growth in business activity as opposed to growth in buyback programs. So that's always an option for us. And certainly, something we're strongly considering for the balance of the year. And -- but again, it's one of many areas of focus for us in terms of where that $200 million of net cash gets invested.

Your next question is from the line of Sanjay Ramaswamy with Bank of America.

Just a question maybe following on from Ben there. Just -- I appreciate the thoughts on the buyback, but just -- maybe just expand a little bit on your thoughts on where you think this business can strategically grow maybe by segment? I know you've obviously talked about inorganic growth before. And obviously, the desire to do a potentially larger acquisition, but where do you look to grow that business? I mean is it in another vertical? Would it be if either land business and obviously expanding into maybe potentially green energy. Maybe just your thoughts on maybe the industry vertical and where you think that best fits within the business?

Sanjay. Great question. It's Ira. I think Michael will have some comments here as well. But I think we've been pretty clear over the past couple of years on this one, although could partially believe around COVID the fact that there haven't been many successes to report as of yet. Our most significant areas of focus are on our land business. Arguably, it's the largest market that we participate in globally and the pipeline of opportunities in that business are greatest. Specifically within that area, we're focused on our commercial and industrial activities. We did a couple of acquisitions, now exactly 5 years ago, that are both performing very well.

We've grown organically around those acquisitions, and those have been added to our legacy business that existed previously, but we haven't done a whole lot since. So we're much more active today in terms of looking at ways to continue to build out that platform, which is a real solid ratable, strong return type business. So that's one area. We continually talk more and more about our Connect business, which I believe maybe our fault, but not everyone externally fully understands how that business is advanced. I mentioned earlier in my prepared remarks, that Connect now represents almost 1/3 of net revenue in our land business. That's an area where we're doing energy management consulting in nat gas and power areas, where we've got a brokerage business.

We're trading in those commodities, and we have a growing suite of services on the sustainability side. There's obviously a lot of excitement in that arena worldwide. There are a lot of folks that have been performing activities in that regard for long time and we found companies that are growing very rapidly. So there's a lot of avenues that we can take to build out that Connect business, which has tremendous amount of growth potential consumer in the world is focus on ESG sustainability in particular. So that's another area where we're investing a lot of time and energy looking for opportunities to continue to grow organically, but to built on some investments to accelerate the growth in that part of our land business as we refer to it today. Mike, you have anything to add?

I think you did a great job there, Ira. So it is going to be that land business, certainly accentuating the U.S. as a reason why we've spent so much time with the land platform, still very sizable market. But we're also supplying diesel globally off of the back of our global aviation footprint. We're going to be burning diesel for decades. While we're helping the carbon story with the sustainability and making that a bundled offering. So we're able to help drive that energy transition. Our marine business is a cyclical business. It's following on the footsteps of aviation. I mean, aviation is a great story where we have got a global offering.

We've got a lot of nonfuel offerings. So we've expanded that. Of course, the physical logistics footprint is impressive. We continue to grow that and go from strength to strength there. And marine will follow those footsteps, it has different dynamics to it. And then our defense business, I've said this many, many times, we've got tremendous capability in terms of providing a level of service to a very particular client, and we've developed that. That started in the '80s when we acquired NCS in 2010, we thought it was a sunset business, lasted for over 10 years, I guess. So that exceeded all of our expectations and the rationale for acquiring that was to use the capability to broaden the base.

We got, in terms of our engagement with defense, we got very cut up within or particular Afghanistan project, but we developed those capabilities. That's another area that we'll continue to investment. We will grow organically. There's no better growth than organic growth and we're being selective. We promised not to do anything stupid. There's a lot of ways you can spending money, and we're being careful and judicious about it. And particularly in times like this, you've got a marketplace that's somewhat hyperbolic. It's quite extraordinary to see what's going on in the marketplace. So we're being careful playing the long game, but those are the areas, there are synergies that cut across all of those.

You've got to ship a plane, a truck, an airport, a seaport, a truck stop. So you've got moving targets and stationary targets they are getting fueled on ground, regardless of whether they go sea or they're flying around. So all of that creates really this global capability to be able to provide liquid gas and power and sustainability solutions. So I don't know. So I think it's great story, we're providing power agreements. We're sourcing, renewable 190 renewable peel plants that we're providing, energy advisory services in 55 countries. It keeps growing. So we've got, I think, a good future in front of us. And we feel like we're getting stronger every day.

Very thorough. That was great. And I appreciate all that, especially in terms of the marketplace and the valuations are. Maybe just on aviation, if we can hit on some things there. Just in terms of some color on the geographical mix of your commercial aviation business there. And obviously, the exposure and volumes out of Asia is going to be closely watched over the next couple of quarters just given COVID. But maybe if you could just walk through where you see the biggest weakness ex-Asia and even in Asia and how you kind of see the sequential trends through the second half from a volume perspective?

I would say that we talked on the call about the fact that North America is ahead, right, it's been coming back pretty rapidly. That's the largest piece of our pie, followed by Europe and then Asia. Europe is interesting because that's where we made the investment a few years back and became more physically present. As I think Mike mentioned in his prepared remarks, 70 or 80 on our 4 locations, where we're either exclusive or one of 2 or 3 field providers. Those are airports that really got stowing pretty badly by COVID, most of the -- many of them being in Europe. So that's -- in terms of where we're behind in recovery, that's where the greatest opportunity is. It's not massive volume, but because of the physical nature of that activity, it's higher-margin activity.

So as that comes back, it will pretty rapidly contribute to gross profit. And then there's still more volume and gross profit to be achieved as North America continues to rebound as well. So we haven't historically given a specific forecast for where volume is, but we definitely expect relatively significant increases in volume over the balance of the year, not back to where we were pre-pandemic, but the number will continue to grow from where it is today to higher levels, probably 20% up easily next quarter. And fourth quarter is too far out to forecast considering all the uncertainties out there. So there's a lot of runway for aviation to rebound. The Asian piece is relatively small in the overall scheme of things, but there's some opportunity there as well.

So it's an improving story, but there's still reasonable amount of uncertainty as to how quickly the international markets rebound in Europe and Asia, considering the latest unfortunate news about the variant, and we're all waiting to see what that may translate to going forward in terms of additional lockdowns or hopefully, the opposite and things settle down and more and more markets open up. Australia is still locked down. So we're watching that activity every day, and we remain optimistic that we're going to see growth, but how much growth and value we see is really dependent upon a lot of the things that I just described in terms of government decisions and people movement around the world.

Makes sense. Yes, that's great color. And just as my final follow-up. Just in marine, obviously, we've seen the dynamics there shift quite significantly over the last year, obviously, with the pickup in IMO helping 2Q '20. But maybe if you could just give some color on that gross profit per metric tonne kind of dynamic. I mean, obviously, we're seeing some strength in containers, as you mentioned, some outside strength there. But can you just maybe talk through how that -- I mean, how that business mix is changing and how that gross profit per metric ton can potentially improve sequentially from here?

Yes. We've historically traded in a fairly wide range in terms of gross profit per ton. This quarter, I would say we come in closer to the historical low end of the range. Of course, the early part of last year, we were way beyond the high end of the range because of the volatility caused by the IMO shift last January. One of the reasons why we're in that low under range is certain activities that still haven't come back such as cruise and also this will flow with extremely limited volatility, and we often make incremental margin on the risk management side, where customers are locking in on a forward basis. So you're not seeing a lot of that activity in this environment.

So as you look to the future, the opportunities would come from heightened volatility, which would improve that piece of the business, a rebound in a market like cruise and hopefully, again, if everything in the world starts to improve, we've got our friends in the cruise business are all headquartered within about a 5-minute walk from our office. So we know them very well. And hopefully, they're going to start seeing more activity as we head towards the holidays and into next year. And what's also cool is when we talk about Connect and sustainability, a lot of the marine customers are focused on being more carbon friendly and often look to us for solutions in addition to buying bunker fuel from us to operate their ships around the world.

So that type of activity is picking up as well and could contribute to marine profitability going forward. So marine is a tough one. It's a competitive marketplace and marine is cheap as well people going after the same customers, but we still have a leadership position around the world. We've had relationships that date back decades, and we'll continue to look to capitalize on those relationships and increase profitability. But the margin per ton metric is dependent upon a lot of the factors that I described below. So that will -- that has tended to bounce around over the years. Price is a factor as well. So for the foreseeable future, we think second quarter profit per ton is probably a reasonable metric to assume for maybe balance of this year, but that could change based on a lot of different factors. And of course, we're trying to achieve the highest possible returns for that business.

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

Well, thanks to everyone who is listening to our update. We feel we're well positioned to engage the continuing opening of the markets and the transition that we would [miss set]. So we look forward to updating you on the next quarter and stay safe and let's hope that more people get vaccinated, so that we can continue to get back to a normal way of life. So take care, stay safe, and we look forward to updating you next quarter.

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.