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Thank you for standing by, and welcome to World Kinect Corporation's Third Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions]. I would now like to hand the call over to Braulio Medrano, Senior Director of FP&A and Investor Relations. Please go ahead.

Good evening, everyone. And welcome to World Kinect's third quarter 2024 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. With me on the call today is Michael Kasbar, Chairman and Chief Executive Officer, and Ira Birns, Executive Vice President and Chief Financial Officer. I'd like to take a moment to announce that Elsa Ballard will be leaving World Kinect' after this earnings call. We would like to recognize and thank Elsa for the fantastic job that she has done with our investor relations efforts by improving communication channels, driving greater transparency, and improving the quality of our materials. As she moves on to new opportunities, we want to wish her the best in her future endeavors. Thank you, Elsa. And now I'd like to review our Safe Harbor Statement. 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 actual 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. 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 period. At this time, I would now like to introduce our Chairman and Chief Executive Officer, Michael Kasbar.

Thank you, Braulio. And thank you, Elsa, for all the great work that you did for us. We really appreciate it, and best wishes on all your future endeavors. Good evening, everyone. Last quarter, we spoke about challenging market conditions in our Land business. And even though some of these headwinds persisted in the third quarter, our Land segment rebounded from the second quarter as expected. Our overall business also performed in line with the guidance provided last quarter, highlighting our progress towards more predictable financial results. Consistent with my messaging in prior quarters, our management team remains focused on implementing a more leverageable business model across all of our company's operations. Our capital allocation strategy remains consistent, prioritizing opportunities that drive more predictable returns within an acceptable risk profile, all while leveraging our last half mile value-added energy distribution solution platform. That's a mouthful, but that's what we do. This disciplined approach to return, risk and cost management is the key to achieving the operating efficiency targets we shared with you at our Investor Day earlier this year. Our commercial business and general aviation platform continues to be a great example of this strategy, and we've marked another quarter of excellent momentum. This scalable platform of diversified, yet highly complementary offerings, combined with robust summer demand in both the passenger and air cargo sectors, propelled aviation to double-digit growth in operating margin. Operating margin Aviation also benefited from the strategic sale of Avinode last quarter as growth in core revenue contribution more than offset the income from Avinode, but with a lower expense profile. As we noted last quarter, we reallocated some of the proceeds from the Avinode sale to the acquisition of a tuck-in bulk aviation fuel distribution business, which was completed at the beginning of the fourth quarter, and it's expected to be fully integrated into our aviation platform by year end, expanding our distribution network and customer base. While relatively small, this strategically complementary acquisition is a great example of the core investments we will prioritize to drive operating leverage, growth and returns. Our global Aviation business is well positioned to capitalize on the long-term growth trajectory in aviation. Although more cyclical than aviation, our Marine business also operates on an efficient and highly scalable platform, delivering outsized financial results from small improvements in market conditions, while still creating value and contributing cash flow even in less favorable economic environments. So in the third quarter, while Marine generated an 8% year-over-year increase in gross profit, Marine operating margin improved by 450 basis points, demonstrating the power of the platform to create operating leverage. Marine continues to represent a valuable diversification component of our portfolio, a business with minimal working capital requirements and significant potential upside under the right conditions. As I stated in my opening remarks, Land rebounded significantly in the second quarter of this year as market conditions improved in our North American fuel business, as well as natural gas where prices and volatility edged upward from the uncharacteristically low levels experienced in the second quarter. Ira will share more details in his comments. As discussed in New York in March, growing and scaling the more predictable offerings in our Land business is our largest opportunity for value creation. In our North American liquid fuel business, we now have a clear path to improving operating efficiency and margins by consolidating and standardizing on a single technology and operating platform, much as we have done in our Aviation and Marine segments. We will be completing this migration over the course of 2025. Not only should this initiative increase the profitability of our existing North American fuels business, but it will establish a vehicle for effective integration and synergy capture. Rapid and efficient acquisition integration has been an effective growth strategy for our Aviation and Marine segments that will finally be replicated in our Land business. Doing so in what is still a relatively fragmented land space, a market significantly larger than the combined marine and aviation markets, is a key driver, as we discussed at our Investor Day, to accelerate attainment of our medium-term operating margin target. And finally, as always, we wouldn't be here without our outstanding global team. It's their passion, innovation, and dedication to serve our customers, suppliers, and partners with the essential energy and logistics supply assurance that they require that makes us who we are and what we are. Thank you for what you do every day. It is truly a pleasure to serve with you. Ira will now provide a detailed financial and business update. Ira?

Thank you, Michael. And one last time, thank you again, Elsa. And good evening, everyone. Before I begin the core financial review, please note that our third quarter non-GAAP results reflect approximately $3.2 million of total after-tax adjustments. This includes approximately $2.1 million associated with the incremental tax expense related to the sale of Avinode and approximately $1 million principally related to an impairment charge within our Land segment. Reconciliations of our non-GAAP measures are always available on our Investor Relations website and also in today's webcast presentation. On a consolidated basis, our Aviation and Marine segments delivered solid year-over-year results, and our Land segment made meaningful improvement sequentially as certain market conditions that impacted us in the second quarter improved. Total volume of $4.4 billion was down slightly year-over-year, and consolidated gross profit declined 5% from last year's third quarter to $268 million, in line with the guidance we provided last quarter. The year-over-year decline was primarily due to lower gross profit in our Land segment, partially offset by higher gross profit in both Aviation and Marine. Our aviation volume was down approximately 16 million gallons, or just about 1% year-over-year. Again, this was impacted by our decision to exit certain low margin bulk fuel business during the fourth quarter of last year. If you exclude the impact of exiting this bulk fuel activity, volume was up approximately 4% year-over-year and also 4% sequentially, benefiting from summer seasonality. Aviation gross profit increased $3 million or 3% year-over-year, positively impacted by stronger physical inventory related profitability in our core commercial business when compared to the third quarter of 2023. This is offset in part by the sale of Avinode, which contributed approximately $10 million of gross profit in last year's third quarter. Also, as Mike mentioned, we recently closed the small tuck-in acquisition in business aviation. This transaction will expand our network of FBO and aviation fuel card customers in the United States. As we look to the fourth quarter, we expect a sequential seasonal decline in gross profit. We also expect a year-over-year decline in gross profit in aviation, driven principally by the impact of the Avinode sale. In the Land business, volumes decreased 3% year-over-year, principally driven by decreases in our North American wholesale and retail business activities, offset in part by increased natural gas and power volume. Natural gas and power represented 33% of volume in the third quarter, flat with the second quarter, and up from 31% in the third quarter of 2023. In Land, while our core North American fuel and natural gas businesses improved from the soft second quarter, contributing to a 26% sequential increase in gross profit, on a year-over-year basis, North American fuel activity was still lower. This, combined with the continuation of the unfavorable market conditions in our Brazilian operations that we discussed last quarter, contributed to a 16% year-over-year decline in gross profit for the overall Land segment. Looking to the fourth quarter, Land results should continue to improve on a year-over-year basis, with gross profit expected to be flat to up slightly year-over-year. As we have discussed throughout the year, we remain focused on refining and optimizing the portfolio of activities within our Land business. As we head towards 2025, we have identified several opportunities to significantly improve the profile of this business, which should drive improved margins and returns, benefiting the broader business and strengthening our foundation to achieve our medium term financial targets. We hope to share more details by the time of our next earnings call in February. In Marine, volumes were down 3% year-over-year and gross profit increased approximately 7%, principally driven by strong performance in our core resale business activities, including year-over-year growth at several of our physical locations throughout the world. As we look to the fourth quarter, we expect Marine growth profit to be effectively flat sequentially, but lower year-over-year, principally related to reduced market volatility and somewhat lower bunker fuel prices compared to the fourth quarter. of 2023. As you look to the fourth quarter on a consolidated basis, and with the backdrop of the related segment gross profit comments shared a moment ago, we expect consolidated gross profit to be in the range of $253 million to $260 million. That's $253 million to $260 million. Now let's turn to adjusted consolidated operating expenses, which were $195 million in the third quarter, down 6% year-over-year, also consistent with the guidance provided last quarter. For the fourth quarter, we are expecting adjusted operating expenses of $194 million to $198 million, generally consistent with the third quarter and a decline of approximately 5% year-over-year impacted in part by the elimination of Avinode-related expenses, offset in part by expenses associated with the recent aviation tuck-in acquisition. We remain focused on our medium-term consolidated operating margin target. As mentioned earlier, ongoing efforts in sharpening our portfolio of activities and greater operating efficiencies in our land business should be a significant factor in making progress towards this target. But we also remain focused on driving additional efficiencies across the broader business, which should contribute to the achievement of this target as well. Interest expense was $24 million in the third quarter, down about 16% year-over-year and below the guidance provided last quarter as we benefited from the recent interest rate reduction and we also had lower utilization under our liquidity facilities during the quarter. We expect another year-over-year decline in interest expense in the fourth quarter to $23 million to $25 million, with our full year 2024 interest expense on track to come in approximately 18% below fiscal year 2023. Our adjusted effective tax rate in the third quarter was 24.7%. That's slightly higher than anticipated and up slightly year-over-year. Based upon what we know today, our adjusted effective tax rate for the fourth quarter should be in the range of 20% to 23%, resulting in a full year 2024 adjusted effective tax rate of 17% to 19%. In the third quarter, operating cash flow was actually negative $39 million. The use of cash in the third quarter was principally related to increased capital requirements associated with seasonal increases in business activity, most specific to our Aviation business. As we work through the fourth quarter, we are focusing on every opportunity to drive a solid cash flow outcome to finish the year. Also during the third quarter, we repurchased an additional $28 million of shares, increasing total year-to-date repurchases to $57 million. And we also announced a $200 million increase to our share repurchase authorization, further demonstrating our commitment to returning capital to shareholders. In closing, I want to leave you with a few thoughts. Aviation delivered solid year-over-year results, driven by strong performance in our core commercial business, offset in part again by the impact of the sale of Avinode and we recently closed the small tuck in acquisition, which further expands our core offerings in the United States. Our Land segment rebounded nicely from the significant weakness experienced during the second quarter. We remain highly focused on driving greater ratability across our business by continuing to carefully sharpen our portfolio of business activities, including the refinement and optimization of activities within our Land business. Marine also delivered year-over-year growth principally related to higher profit contribution from our core resale business activities. And again, we repurchased $28 million of shares during the quarter, increasing year-to-date repurchases to 2.1 million shares. Finally, we remain highly focused on making progress towards our medium-term financial targets, which we shared in March. The achievement of these targets will further strengthen our balance sheet, enhance profitability, and improve our return on invested capital, all driving greater shareholder value. Thank you. I will now turn the call back over to our wonderful operator, Latif, to begin the Q&A session. Latif?

[Operator Instructions]. Our first question comes from the line of Ken Hoexter of BofA.

Ira, maybe just looking at the business review you just talked about and now your cost focus, is there any other Avinode out there that you'd look to monetize? Are there other pieces that you'd look to refine as you review the businesses?

I wouldn't necessarily put anything in the Avinode category because that was obviously an outstanding achievement considering the valuation that we got for that business. But, yes, there's certainly other opportunities to look at pieces of the business that we may be able to move on from and reallocate capital into our core business. There's lots of discussions around those topics. But, again, Avinode was great, but an outlier, in terms of not necessarily part of our core. Now we're more focused on our core activities and where accelerating investment makes sense and also where it may make sense to either pump on the brakes or even consider exiting certain activities, which in Land, in particular, should – the goal is to simplify the land story, improve our operating margins and profitability, and simply allow us to focus more of our time on what really matters, which should only benefit our efforts to drive greater levels of growth across the business.

So let me take the flip side of that, because years ago, when we launched coverage, you were very, very acquisitive over time, and that seems to have decelerated. So I guess alternatively, given the elongated freight recession, is it creating any additional sellers, like the tuck-in one you announced this quarter? Are you seeing more opportunities like that?

Yeah, there's a few things. Obviously, we lived through COVID, we were digesting a very large acquisition in Flyers, and interest rates were skyrocketing, which didn't favor M&A for anyone, really. Flyers is integrated. We're actually benefiting from their very efficient platform within our North American fuels business and rates are starting to come down, which I would say is bringing more opportunities out of the woodworks. I would say there's greater opportunity today than there has been in a while to find opportunities to grow inorganically, but we're always very, very careful about where we make those investments and take our time to make those decisions. But I would say the pipeline and opportunity set is growing and we have greater confidence in our ability to quickly integrate those types of businesses because we've worked – our team has worked phenomenally hard on moving to a platform that's highly leverageable, something we didn't have many years ago.

Let me wrap up with the core business, right? So you talked about Land maybe being a little disappointing in terms of performance. I just want to understand, you kind of listed a bunch of things. Was it more seasonality than you thought? Was it just different things impacting the business? Maybe can you walk through that a little bit more?

Yeah, a lot of the things that we talked about last quarter, which was very weak on a comparative basis year-over-year, started to improve. One of the things we talked about last quarter was nat gas because you had an oversupply situation, extremely low prices. That market is stabilized and we did much better this quarter. On the flip side, we talked about Brazil and Russian imports and single supplier market aside from those imports and that hasn't improved. So the year-over-year comparison there remains weak. And then, last quarter, we talked about our fuels business in North America. Specifically, we talked a bit about what was going on in the West Coast. That hasn't changed that much, but we did see improvement in other parts of the country. So we certainly had a better outcome in our North American fuels business in this quarter than we did last quarter. But still down a bit from last year. So I think as we enter into 2025, I think with your previous question and market conditions hopefully continuing to move in a better direction and maybe reshaping the portfolio a bit more, the Land has an opportunity to perform certainly at a higher level next year. And we need that, right, to start moving more significantly towards the targets we shared for operating margins in particular, and even our EBITDA target.

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

I think you both touched on it a little in the opener and sounds like maybe we'll get some more detail soon, but I was hoping you could dig in a little on the path from here to the 30% operating margin you're targeting in Land. How much of the bridge from where you are today to these headwinds coming back and normalizing and how much is maybe some of these more controllable levers that you've discussed.

Look, the market conditions normalize, it could only help. But to be honest, the part two, which you've nailed, is even bigger, right? There are things that we control and strategic moves that we can make that could provide us with significant progress towards that goal relatively quickly. None of it is an overnight exercise. And that's why we've given ourselves till 2026 with the targets we shared. But we have some businesses that significantly outperform that operating margin target in our portfolio. And unfortunately, we have some that significantly underperform that target. Simply by doing less than the underperforming category, your number and that metric moves in the right direction. So we're focusing on things like that. And also the right type of M&A could help as well. Because if you look at the cardlock business, for example, that operates at a premium to our target operating margin, right, because that's an extremely low cost – higher margin, low cost operation. So there's multiple levers, right? Rebound in the existing business that you mentioned, things within our control that we could change or stop doing, and then strategic M&A right up in the middle of the fairway that could drive growth and synergies with our existing platform. So there's a lot of that umbrella of items that I described is within our control. And we're spending a lot of time focusing on moving in that direction. And we're really hoping we'll have more tangible details to share by the time we get to the February call.

Just to add a little bit of color to that, John, it's more of less that has less variability into it in terms of its market profile. So, again, distribution was – we come from the commodity side and we're pretty good at it. But disproportionate and the variability of it obviously is not kind to results. And then platform. So the Flyers platform is what we're going to consolidate under. And that is going to make all the difference in the world. So the right portfolio selection with the right profile and the right, both, commercial and financial dynamics and the right team with the right platform. So the combination of all of those, and as Ira has said is working on and the rest of the team, stopping and exiting some of the parts of the businesses that, while are okay, are not necessarily additive. And there's some amount of trading activity that is perfectly good, but variable, but they've been disproportionate. And it's been difficult, obviously, to have predictable results and to be able to communicate. And they don't really fit with where we're going. So there's a clear focus, there's a clear plan. The platform is going to be transformative. So hopefully that gives you a little bit of color.

My follow-up is just on working capital. It was a pretty sizable headwind over $100 million in 3Q and I know Ira mentioned some seasonality there. So given that seasonality, is there a natural reversion there where we can see some offsetting tailwinds in future quarters? And then relatedly, was there any of that headwind in 3Q? Was any of it price related?

Yes and yes. So, certainly, our goal is to recover from our first negative cash flow quarter in a while. It was a strong seasonal quarter on the Aviation side, so we had some investment in working capital. We had some customers coming to us asking for temporary increases in their credit line because of the expected strong summer, which came to pass, so that increased some of our receivable requirements. So, yeah, that was part of it. And then there are some price-related timing differences that we encounter from time to time on our inventory positions around the world. So that impacted us a little bit as well. And so, we're shooting for a positive cash flow quarter in Q4, and we remain confident that we should be delivering in the approximate range that we shared longer term on an annual basis in 2025 and beyond from an operating and a free cash flow standpoint.

Our next question comes from the line of Pavel Molchanov of Raymond James.

Standard question to start. Low carbon was 12% of gross profit in Q1, 8% in Q2. What was it in the most recent quarter?

Gross profit was 11% this quarter.

As you look at SAF, you've had a series of announcements along those lines over the past few months. Still not huge volumes, obviously, in the grand scheme of things, but on a percentage basis, how much more volume do you think you'll do in SAF this year versus the year before?

It's the law of small numbers because we're still only doing a few million gallons. On a percentage basis, arguably, pretty high percentage, but that doesn't contribute millions and millions of gallons, but it is additive and generates incremental gross profit. And you also made reference to a couple of announcements, one of those a bit larger than the other depending on the timing and how that pans out that could further accelerate some growth here in the US. So, again, if you're only doing a few million gallons a year, a million gallon increase would be a 25% increase. So it's tough to give you an exact number, but the pace of growth has definitely picked up little by little each year. And hopefully that'll accelerate as we head through 2025 and 2026 compared to where we've been in the past.

You're being a little blasé.

I'm being blasé.

We've been at this for about 15 years. And so, we're one of the largest distributor of SAF in the US and the world. And we've got tremendous capability to not only deliver it, source it, but also integrate and help our clients understand all of the technical regulatory attributes to it. We have some of the most accomplished people in the space. And it is the only solution for decarbonizing the aviation industry. So combined with the incentives in the US and the regulatory in Europe is going to become materially a bigger part of what we do. So, it's strategically important as is all of the renewables. You can't really talk about energy without talking about the renewable space. And we certainly have a significant competitive advantage compared to most of other participants. So drop in fuel, and it's strategically important. There's virtually no conversation that we have about jet fuel that there isn't a discussion about SAF. So it's an important part of what we do. And from the digital book and claim, physical distributions, we basically do it from soup to nuts. So there will be more of that in our future because it's where the market is heading to.

If I can follow up on natural gas, so kind of a macro question, we're seeing a lot of rhetoric about data centers' appetites for net gas, particularly with the AI build out. Is that something you're observing in your conversations with enterprise customers?

The data centers, that backup energy is something that we've developed a certain capability at. And within the various hyperscalers, we're engaged with conversations on the data center side. So it's a perfect combination. I mentioned this in our Investor Day. Energy consumption is just going to continue. There's no GLP semaglutide solution for energy consumption. The more energy that you're using, the more that you want, seems to be the name of the game. So, cutting across all of those sources of energy, our ability to participate is pretty broad from advisory to brokerage to services to digital to merchant to logistics, and we cut across practically every single source of energy. So we're extremely well positioned within our platform, and we're engaged within data center operators and hyperscalers and a broad range of different activities. So, obviously, it's focused. You can't do a little bit of everything, but the beauty of our orientation is – there isn't really any part of the energy spectrum where we can't provide some type of service. So, any case, I don't want to take too much time on that, but that gives you hopefully a fulsome answer, and I think that's the beauty of our participation model. Clearly, when you're looking at physical activity and density and location, there are cross structures based on that and having the appropriate platforms and the focus, so that we could leverage is what we're highly sensitive to, so that we're able to have a discussion about our participation model is clearly focused on what is leverageable.

I'm just going to go back to SAF for a second because Mike was right, I wasn't bullish enough. They are small numbers, but not going to give you a going forward number, but our volume year-to-date this year is 40% above what it was last year. So the growth is accelerating, albeit, I'll say it for the fifth time, a small base, but we're seeing that number continue to increase. So you have that metric at least.

And it's just going to be more and more important because the Aviation segment, there's really no other solution at this stage of the game. And while it represents somewhere about 3% of global emissions as the rest of the market decarbonizes, you're going to see Aviation stick out as a larger percentage, so there's going to be a greater demand for it. So we're extremely well positioned to play that distribution service, understand the data required, and provide really a full last half mile solution from soup to nuts, both on producers and consumers. So again, it fits within our model. It's a drop-in fuel. So moving molecules is what we do, regardless of whether they're fossil or renewable. We're dealing with today's reality of a broad based energy diet. And we're understanding the electrons and renewable electrons. And as you're seeing data centers go to nuclear, you're now going to see that opening up P2X with different types of renewable molecules, which, once again, were well positioned to be able to take advantage of. So, any case, hopefully that gives you a little bit of color in terms of how we think about it and how we're positioning the company for the future.

Our next question comes from the line of Ben Nolan of Stifel.

I'll start on the results in the quarter. You came into the guidance range, although it was a little bit on the lower end. And while I'm on that guidance range, that's one of the things that I think Elsa helped you guys to implement. And, boy, has she done a fantastic job. So hats off to Elsa. But can you maybe talk through a little bit of how things moved or maybe shifted you a little bit closer to the lower end of that range or maybe what came up as a surprise relative to what you had originally expected?

You're hitting this up like a million dollar variance. Nothing really. Basically, it was hard to answer that question. I would say maybe the best of the three, Aviation was maybe a million dollar shy of what we had forecast. Everything else came out pretty much in line with what we expected. So the midpoint of our guidance versus where – I think it was $1.2 million difference or something like that. So really doesn't happen every day, but if you saw our internal forecast, the actual results were close on every line, the variances were interest came in better than expected going into the quarter and tax came in a bit higher, but in terms of gross profit and operating income, both of those numbers were almost exactly where we expected. Expenses were exactly what we had guided and projected as well. But I will give you the fact that we were off by a million bucks.

No, no, I was really asking sort of as a way to compliment Elsa there. But my next question relates to, and this – Brazil, I know was a problem last quarter and there was a little bit of a lag effect or rollover into this quarter, which you guys had noted three months ago. You talk a lot about the opportunity for growth in the Land business, but that is almost always when I hear you, or maybe exclusively always, North American land. I know you have the operation in the UK, there's Brazil. Do you see those international land businesses as core or is that not how you view them?

Ben, it's really about focus. When you look at the size of the market, you can't compare, right? So where's the runway? The US market used to be 26% of global energy consumption. I'm not exactly sure where it is today. But that US market is sizable. And so, clearly, there's a greater opportunity for growth. There's a much bigger runway. So that's got to be the priority for us. Certainly, our global logistics capability, I think, is just quite unbelievable in terms of where we came from to the level of global expertise we have in inventory management, distribution, digital in terms of third party, our own physical inventory distribution, and our digital capability for fulfillment, I think is quite extraordinary. But once you get into physical markets, you want to make sure that they've got a certain amount of size. And clearly, there's no comparison from the US market to other markets. We do fulfill on inducement, let's say, or somewhat opportunistically off of our large aviation footprint where we have our distribution assets, but the focus is really the US. That's where there's the biggest runway. We're pretty excited about the Flyers platform, and our team is doing a great job. And that's going to give us the ability to acquire, do tuck-ins, be able to eliminate costs and have EBITDA drop, which is what we're really looking forward to. So we're certainly open. We are a global business. We're doing business in lots of places, as you know, but it's consolidating and looking at markets where there is an opportunity to be worth the chase. I don't know if you want to add some more color to that, Ira?

No, I think I'd be saying something very similar, so I don't want to be repetitive. But again, we've got pretty much double-digit market share globally in aviation, marine. In North America, our market share in land is still very, very small. And as Mike mentioned, it's a massive market. And we haven't necessarily hit it out of the park, historically. We know that. So I think, Mike and I both agree that we've got a lot of heavy lifting to do in North America alone before we spend a lot of time diving into other international opportunities. There may be some niche opportunities that Mike referred to that will always make some sense, but it's really all about North. If anything, I think our focus is going to, in the short or medium term, going to move to a higher concentration of North America than where we are today, as opposed to vice versa. And as we get that machine running in a similar fashion to marine and aviation, we'll have more time to think about focusing on opportunities in other parts of the world.

We got plenty to chew on in the US, that's for sure.

Lastly, on the Marine business, the margins were improved even though the volumes were down a little bit. I think, Ira, you mentioned that part of the reason for that was you had some wins or some growth in some of your physical facilities. It seems like it's a little bit of a departure from, I don't know, historically, where you're mostly just a back-to-back seller. Is that an area that you're looking to do – have a greater presence in an actual physical marine market?

Listen, we got into physical in a real way in – I think it was 2004. We acquired a UK company called Tramp Oil, and that was our first wet foray into marine physical. They were doing it in a very interesting manner. We brought a good amount of discipline to it, and that was a good earner for us. We expanded – we ended up buying Shell's, all of their assets, lock, stock and barrel in, I think, it was 2010 in Gibraltar. You've got 110,000 ships that pass through the Gibraltar Straits. So that looked like a pretty good idea. And now we've got a network of about, I think, 12 locations and it's niche locations, not dissimilar to what we have in aviation, which by the way when you look at the growth in aviation, you're seeing a greater interest. There's a big demand in Europe. It was an article in the journal, I think, yesterday, the day before, a couple of days ago, in terms of cabin fever from COVID is continuing. People are wanting to travel and they're wanting to travel to new locations which is generally favorable to us because our network tends to have those locations. But back on Marine, when you look at the story from a broker to a reseller is really underwriting. We took financial instruments and I think we're extremely creative – we're one of the mavericks in terms of embedding those into physical instruments. And then distribution, well, we first took inventory with a large airline in 2002, and then developed that capability, and then our physical distribution assets, most notably with our Odyssey acquisition, our ExxonMobil acquisition many years ago. But the thing is, is that, we've really become quite, I think, an effective distribution business. So inventory management, we're in dozens of countries with their own personnel and the combination of that third party network, our own physical inventory and distribution assets or digital fulfillment, the combination of all of that is kind of a heady brew. It really is very effective and it allows us to dial in what is the right method of fulfillment and gives us that sort of optionality as well as the customer and optionality to be able to come with a fulsome solution. So we like that. It is a good business mix and it could offset – obviously, if you look at manufacturing, we're not likely to buy a refinery anytime soon. You do have a lot of companies that are making the product. They don't necessarily want to distribute it. So that is a great value add for producers. And then you've got a lot of our customers that want a specific solution. So there's certain parts of the market that can't get a solution. And they actually come to us to ask us to basically set up a physical operation to deal with their specific requirements. So we've got that ability to fulfill that. And it really sets us apart from some of the companies that don't have that capability. And they're looking for a company that they can trust that is a solid counterparty that they understand the quality that they're going to get in the level of service. And I'm very proud of the team. Our physical operations team really does a phenomenal job. It's really quite impressive. So it's definitely a transformative story. And that is a part of the mix and kudos to the team that has developed that. And we now have the ability in niche markets, typically where we are now a physical participant.

Thank you. I would now like to turn the conference back to Michael Kasbar for closing remarks. Sir?

Okay, well, thanks everybody for participating. And thank you to our team. And, Elsa, good luck to you. So everyone be safe and look forward to talking to you next quarter. Bye-bye for now.