WORLD KINECT CORP Q4 FY2024 earnings call

• Efficient capital allocation and operational efficiencies are driving progress toward medium-term financial targets. - Aviation business had impressive fourth quarter results, capitalizing on favorable market conditions in commercial resale and business/general aviation. Marine performed in line with expectations. Land had solid fourth quarter results with the strongest quarterly operating margin of the year. - Divested the Brazil business in the fourth quarter due to underperformance and unfavorable local/macroeconomic trends. - Acquisition pipeline is expanding across core business sectors while remaining disciplined. - Strong cash flow and balance sheet provide resources for strategic investments. - Fourth quarter non-GAAP adjustments included a $111 million pretax charge from the Brazil sale, $9 million costs from exiting certain North American land business activities, and $22 million from an impairment of a minority equity investment in a non-core business activity.

Aviation: Fourth quarter aviation volume was 1.8 billion gallons, up 4% year-over-year; full year aviation volume was 7.3 billion gallons, down 1% year-over-year (excluding the impact of the Avinode sale, volume was up ~4% year-over-year). Fourth quarter aviation gross profit was $120 million, a decrease of 8% year-over-year; full year aviation gross profit was $486 million, effectively flat year-over-year. Land: Fourth quarter land volumes decreased 5% year-over-year; full year land volume was 6.1 billion gallons, down 3% year-over-year. Fourth quarter land adjusted gross profit was $104 million, effectively flat year-over-year; full year land adjusted gross profit was $384 million, down 14% year-over-year. Marine: Fourth quarter marine volumes were down 4% year-over-year; full year marine volumes were down 2% year-over-year. Fourth quarter marine gross profit decreased approximately 22% year-over-year; full year marine gross profit was down 9% year-over-year.

• Consolidated gross profit is expected to be in the range of $234 million to $241 million for the first quarter. - Q1 2025 adjusted operating expenses are expected to be $179 million to $184 million, a further decline from the fourth quarter. - Full year 2025 is expected to see another year-over-year decline in adjusted operating expenses. - Aim to achieve year-over-year improvement in operating margin in 2025 toward the 30% medium-term target. - 2024 generated $361 million of adjusted EBITDA; focus on exiting underperforming businesses and driving efficiencies to work toward the medium-term EBITDA target. - Q1 2025 interest expense is expected to be in the range of $22 million to $23 million. - In 2024, approximately $139 million was returned to shareholders through repurchases and dividends; more shares were repurchased and the dividend was increased in 2024.

• Volatility in local and macroeconomic trends impacting underperforming businesses. - Unfavorable market conditions in Brazil and the UK affecting the land segment. - Declining bunker fuel prices and market volatility impacting the marine segment. - Fluctuations in commodity prices and market conditions affecting gross profit margins.

Q: Digging into the Brazil sale and certain North American businesses, describe what was shed, how to think about further refinement, and scale of what was sold.

A: Brazil was a small part of the land business with volatility and losses; got out relatively quickly. In the US, a non-core heating oil business was restructured, shedding assets and reducing employees. There are still one or two other opportunities to pull out costs outpacing revenues.

Q: Follow up on land segment gross profit growth in 1Q, drivers of improvement.

A: Expect a bit of improvement in core components like cardlock and retail businesses in North America, and a bit on the nat gas side, with Brazil out which didn't move the needle.

Q: On aviation volume growth, what's driving it?

A: Most improvement was overseas in Europe and Asia, tied to commercial passenger growth.