World Kinect (WKC) Q4 2025 Earnings Transcript

Image source: The Motley Fool.

Date

Thursday, February 19, 2026 at 5:00 p.m. ET

Call participants

• Chief Executive Officer — Michael J. Kasbar
• Executive Vice President & Chief Financial Officer — Ira M. Birns

Need a quote from a Motley Fool analyst? Email pr@fool.com

Takeaways

• Asset Exits -- Approximately one billion gallons of volume removed through divestitures and exits in the quarter, as confirmed by Ira M. Birns.
• Portfolio Focus -- Management is narrowing operations to three principal segments: Cardlock, car retail, and natural gas, with other activities deemed noncore and largely exited.
• Working Capital Impact -- The business exits will return capital, increase overall returns, and reduce attention to lower-profit operations that previously tied up resources.
• Seasonality -- With the sale of UK land and other exits, land segment seasonality is now muted, and company-wide seasonality is primarily driven by aviation demand fluctuations.
• Aviation Segment -- Seasonally strongest aviation quarters remain Q2 and Q3; management acknowledged competitive pressure on aviation margins continues and may persist in the short term.
• Hybrid Retail Model -- Management has launched multiple locations using a hybrid model where fuel is owned or leased, while convenience stores are run by independent operators, resulting in "a somewhat better cash flow model."
• Marine Segment Conditions -- Marine business remains stable amid continued low price and volatility environments, with management not expecting a material rebound in 2026 unless price and volatility increase.
• Guidance Methodology -- Management will now provide only annual guidance, citing less pronounced quarterly seasonality due to portfolio simplification.

Summary

World Kinect Corporation (NYSE:WKC) executives outlined strategic exits that consolidated their portfolio, removing roughly one billion gallons of low- or non-profitable volume. Management emphasized a sharper operational focus with Cardlock, retail, and natural gas comprising the company's main lines of business. Executives detailed a reduced seasonality profile in land, while aviation remains subject to cyclical fluctuations and ongoing competitive pressures. The new hybrid retail model was identified as an avenue for margin and cash flow improvement, already underway in several locations. Annual guidance will replace quarterly updates due to the portfolio changes and diminished seasonality, with marine business prospects described as stable absent unexpected market volatility.

• Executives said, "We have actually launched several locations already under that model, and so far, good," referencing early success with hybrid ownership in retail fuel distribution.
• Ira M. Birns said, "unfortunately, they were not really delivering much of anything in terms of operating profit," when describing the rationale behind portfolio exits.
• Management suggested any marine segment recovery in 2026 would require a noticeable increase in price and volatility, stating, "we do not expect anything you know, materially to change in ’26. If it does, that would be upside to our guidance."
• Executives highlighted ongoing contract renewal cycles in aviation, which may influence margin dynamics in the second half of the year.

Industry glossary

• Cardlock: An automated fueling system allowing commercial customers controlled, unattended access to fuel at secure stations, often integrated with fleet management features.
• Hybrid Model (Retail Fuel): A retail arrangement in which the company retains fuel ownership or leases sites, while independent operators manage the convenience store operations, optimizing margins and cash flow.

Full Conference Call Transcript

Ira M. Birns: Yeah. I mean, we are shutting about a billion gallons worth of volume between all our exits, proceeds, and return of working capital in the fourth quarter. In terms of, you know, obviously kind of exceed expectations as we go forward. Our expectations are to exceed that as we move forward. Yeah. So, Ken, just to follow up to the exits in totality, right? Power, energy management, and sustainability services in Europe, and then the piece that Mike just talked about. You know, unfortunately, they were not really delivering much of anything in terms of operating profit. They were tying up capital.

They involve more capital investment if we really wanted to have a chance to grow those businesses in a meaningful way. And we were just dedicating a lot of attention to those areas, which I would generally define as noncore. So it made a lot of sense to make the move. As Mike mentioned, it has a bigger impact on volume than it does on profitability. It will bring back capital, increase our returns, and most importantly, allow us to focus on the parts of that business that we have talked to you the most about over the years, right? Car retail and then, more recently, Cardlock after the Flyers acquisition.

Those two pieces of the pie will become the cornerstone of that business, and that is where we think we have some real growth opportunities. We are already delivering solid margins and returns. And as I mentioned in my prepared remarks, there are some new, new-fangled opportunities in that space to, to enable us to pursue growth that we really had not thought about, you know, several years ago. Yeah. It will be easy for us to explain that business to you. I know if you go back a few years, there were, you know, 15 different pieces to the pie, and now it will principally be three.

There are a couple of smaller inconsequential pieces, but almost the entire business once we are out of these activities that we are exiting, will be Cardlock, retail, and natural gas. So, Mike, in your presentation, you talked about changing to just annual guidance, staying away from quarterly. But, you know, before when you had the European business, there was always the big move of seasonal European land, right, the UK land, right? There was seasonality in first quarter, fourth quarter. How should we think about it now as you exit these businesses? Is it going to be more ratable, more balanced?

Is it something we will not see through Q1, Q2 because of the pending sales, and we will see it in the back half? Maybe just as initial thought, as you just give that annual guidance how we should lay that out.

Michael J. Kasbar: Yeah. I can. For land, I think the seasonality story kind of falls away a little bit with the UK land sale that we had. And a lot of these exits and activity we are doing as well kind of further, you know, while it was not as big of an impact, it kind of further decreased readability. Now it will take a little bit of time to get into, you know, the go-forward run rate, I would say, in land. But overall, the seasonality picture is much improved, and I think the main seasonality story for the company now is really related to aviation, and that is what demand and in flights.

Ira M. Birns: And yeah. But that should cover for land. Yeah. I will add to what Mike said, Ken. So one of the things you were alluding to, reading your mind, is, you know, we always, well, for many years, we talked about heating oil in the UK. And if it was not cold, we would have swing. If it was, that would be a seasonal pickup for land. That is gone. We do have natural gas, which does have some seasonality associated with it. Obviously, you are selling more natural gas in the winter months than the summer months. It is not necessarily as pronounced as the heating oil story was.

And then aviation always has its seasonally strongest quarters in Q2 and Q3. So we still have meaningful enough seasonality where, you know, we start with our weakest quarter of the year. We build up in Q2. Q3 has generally been our strongest quarter in aviation, which is obviously the biggest piece of the pie, and then we tail off a bit in Q4. You know, that should still be the case, even though we have eliminated some of the pieces of the pie that had certain, you know, some levels of seasonality as well. Great. And sorry, I do have another one or two if I— No. No. Go ahead.

Can you expand on the impact of, you talked about owning and managing the fuel yourself, but partnering with independent operators who run the convenience stores? Can you maybe detail that? And then the competitive pressure on aviation sounds like you expect more. Is this a new normal or a change in business that you are seeing, that increase? So I will start with the first, you know, the first question. That model is growing in popularity in the C-store space in the US. Call it, you know, call it a hybrid model. We, you know, we were still focused on growing the model that we talked about for many years.

But there are scenarios where we find opportunities to grow the business that were not as simple with the simple distribution model that we had in the past, if we are willing to take an ownership, or it does not—we do not have to own the site. We can lease the site. Position ourselves. Interestingly enough, it is actually a somewhat better cash flow model. Because when we enter into those long-term arrangements, we generally have, you know, incentive-type payments to go out upfront that we earn back the life of the seven-, ten-, fifteen-year deal, which no longer would be the case in this newer model. And, you know, we own the fuel.

Therefore, we are reaping a higher margin on the fuel. It is actually a good cash flow model, so it will not necessarily increase our working capital position because we have extremely solid credit terms in that part of our business. So it just opens up doors for us to find, you know, more growth in that part of the market that we had not really focused on historically. We are looking at it very carefully. We are understanding that we own the asset. We have to make sure that the economics make sense, and we generate the returns that we want. But we are finding opportunity.

We have actually launched several locations already under that model, and so far, good. In terms of aviation, I would not use the words “new normal,” but it may be the temporarily new normal, right? I think we are still seeing—or I know we are still seeing—some of that as we speak. You know, quarter to date. You know, we will take it a quarter at a time. The margins are still strong. Then there are also growing opportunities to find opportunities to do— I said that word twice. Sorry. To expand to new locations that could offset some of the margin pressure from, you know, that competition word, if you will.

So the team is out there looking for opportunities to add airport locations to the portfolio, which will drive additional volume. So I think we still have a lot of opportunities there, but cannot tell you whether what we saw in the fourth quarter is exactly what is going to happen in Q1 and Q2, but at the moment, we are seeing a bit of the same. And we will see what happens as the year progresses. Typically, in aviation, a big chunk of the, as you may remember, of the contracts roll in about the middle of the year.

So, as we are going through those, you know, what is akin to an RFP process for the contracts that go from mid-’26 into ’27, we will know a little bit more about, you know, where we come out from a margin standpoint as we finalize those negotiations. So plenty of opportunity, but, you know, we just wanted to conservatively provide some caution on the fact that competitive pressure is out there. Alright. And if you will indulge me, I will toss one more out just to wrap it up. But the marine business, you talked about waiting for a rebound. Is that incumbent upon shipping volumes? Is it trade lanes?

You know, given the dynamic and changes in the container market right now, what are you looking for on rebound there? And thanks for the time. Thanks. Thanks for all the questions, Ken. Appreciate it. Look. In marine, it is the same story. Certainly, there are macro factors, you know, that could always help. The biggest macro factor that has historically helped, if you look at our P&L over the years in the marine business, is price and volatility. You know? And we remain in a relatively low-price environment, a relatively low-volatility environment. So the business, I would describe that business as stable, that always has opportunity to pounce on when things move in the right direction.

It could be trade lanes could help out a bit. All sorts of things that could drive opportunities there, but the most significant have always been price and volatility, and we are still, you know, again, in the lower end of historical, you know, price range, and therefore, you know, we do not expect anything you know, materially to change in ’26. If it does, that would be upside to our guidance.

Ken Hoexter: Thanks for the time, guys. Appreciate it. Thanks, Ira.

Ira M. Birns: Thanks, Ben.

Operator: Thank you. I would now like to turn the conference back to Ira Birns for closing remarks. Sir?

Ira M. Birns: Well, thanks again for all the questions.

Michael J. Kasbar: And thanks to all of you, the rest of you, for joining us today. I know we have been on a bit of a bumpy road these past few years. But I am very excited about and have great confidence in the current trajectory of our company, supported by the strategic changes we made across our organization. As we have discussed today, we now have a simpler, more focused business model that allows us to concentrate on what we do best: leveraging our global best-in-class platform to reliably deliver fuel and related services across the transportation and broader energy distribution markets. This industry continues to evolve and so do the needs of our customers.

World Kinect Corporation has always been at the forefront of helping customers navigate risk, volatility, and operational complexity with consistency and insight. With a streamlined portfolio and a renewed focus on disciplined execution, and with a much tighter portfolio of business activities, we are better positioned than ever to meet those demands. Before we close, I want to thank all of our employees around the world for their commitment and support, particularly during the year of significant change. Their focus, professionalism, and dedication are foundational to our success. We look forward to updating you on our journey as this critical year progresses. Thanks again for joining us, and we will see you in April. Have a great day.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.