Ladies and gentlemen, thank you for standing by and welcome to the World Fuel Services 2020 First Quarter Earnings Conference Call. My name is Kevin, and I will be coordinating the call this evening. Operator instructions: As a reminder, this conference is being recorded Thursday, April 30, 2020. 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, Kevin. Good evening, everyone, and welcome to the World Fuel Services first quarter 2020 earnings conference call. I'm Glenn Klevitz, and I'll be doing the introductions on this evening's call alongside our live slide presentation. This call is also available via webcast. To access this webcast or future webcasts, please visit the World Fuel Services website and click on the Webcast icon. With us on the call today are Michael Kasbar, Chairman and Chief Executive Officer; and Ira Birns, Executive Vice President and Chief Financial Officer. By now you should have all received a copy of our earnings release. If not, you can access the release on our website. Before we get started, I would 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'll begin with several minutes of prepared remarks, which will then be followed by a question-and-answer period. As with prior conference calls, we ask that members of the media and individual private investors on the line participate in listen-only mode. At this time, I would like to introduce our Chairman and Chief Executive Officer, Michael Kasbar.

Thank you, Glenn, and good evening everyone. We are speaking to you today, as you all know, while much of the world remains under some form of quarantine, with dramatically slower activity in most parts of the market and worldwide passenger travel shutdown or severely curtailed. The impact from the coronavirus pandemic is affecting everyone and every business globally in one way or the other. Before I go further, I want to say how proud I am of how our global team has continued to operate our day-to-day business activities safely and flawlessly with nearly all of our employees working from home or on the front line delivering fuel. Our global physical logistics team has actually improved their performance metrics — that's commitment. In times of change, great change, it's also a time of great learning. It's ironic that being separated from each other has brought us closer together and driven efficiency. Am I a little bit too low here? Can we increase the volume? Okay, sorry about that. So as I said, times of great change are also times of great learning. It's ironic that being separated from each other has brought us closer together and driven efficiency. Our level of engagement and productivity has skyrocketed amongst ourselves and with our customers, suppliers and partners. Being headquartered in Miami with annual hurricane preparation, we are very familiar with business continuity planning. Investments we have made in technology over the past couple of years have also facilitated our ability to very effectively run our business remotely. So a big thanks to our tech team. We benefited from starting our global response in January, led by our Head of Global Security and Resilience, and in February started requiring self-quarantining for anyone that was exposed to a suspected high-risk environment. I am happy to report we have very few instances of transmission throughout our organization. People have always been the most valuable part of any enterprise but especially one like ours. Their support of our business while working remotely or on the front line and tending to themselves and their families is deeply appreciated. We are also grateful for the efforts of hospital workers, emergency medical technicians and thousands of volunteers around the world for their heroic efforts in these unprecedented times. In support of such efforts here in Miami and in various other locations where we operate, we have been supporting these heroes by arranging for the delivery of food to them from local restaurants. Coming off our solid performance in 2019, we again delivered strong results in the first quarter despite being impacted by the pandemic during the last few weeks of the quarter. While the shutdown of nearly all passenger air traffic significantly affected Aviation results, our Marine and Land businesses performed well in the first quarter despite being impacted to a lesser extent, with Marine delivering its highest level of quarterly gross profit in more than five years and Land delivering its strongest quarterly operating income contribution since 2016. While some Aviation activity remains relatively — in addition to commercial passenger aviation, business aviation and government-related activity also declined during the quarter. Our Marine business was positively impacted by the January 1 IMO transition to what had been much higher-priced low-sulfur fuel oil for most of the quarter. Prices have since declined materially as crude oil prices fell to record lows. Our Land business benefited from strong domestic demand in the U.K. during the first quarter as well as continued growth in our World Kinect Global Energy Management business. With Aviation most significantly impacted by the pandemic, the strong results delivered by Marine and Land again demonstrate the value of our diversified business model. However, as we look to the second quarter to one extent or another, we expect all of our businesses will be materially impacted by the coronavirus pandemic. While commercial activity is slowly restarting in regions like Asia, much of this sector's activity remains severely reduced. And Marine, while the cruise sector remains most significantly impacted, other segments have also been affected. In Land, with stay-at-home orders still in place the retail gas and diesel market has declined significantly with weakness in other select sectors such as construction, schools, universities and busing negatively impacting our commercial and industrial business as well. We are continuing to support our customers who have needs during this business-as-unusual period and we remain close to our customers who are actively planning their requirements when quarantines are lifted. As you would expect, we are focused on managing liquidity and reducing expenses to keep our business as strong as possible during this uncertain period, keeping our team healthy and our customers well served. So as we steer the company through this downturn, we remain focused on the business drivers that have led to our historical success as well as our long-term strategic objectives: managing risk with solid underwriting and a solid balance sheet, driving organic growth, sharpening our portfolio of business activities and, again, continuous cost management. I've been in this business for my entire career and I've lived through many economic downturns, and we have bounced back from them all. While the crisis caused by this pandemic has led to what is clearly the most severe downturn any of us have ever experienced, I believe, while it will take some time, we will rebound again and we will continue to be a trusted partner in the markets we serve around the world. Thank you. Thank you for your support. Please stay safe. I'll now turn over the call to Ira for a financial review of our results.

Thank you, Mike. Good evening, ladies and gentlemen. As Mike just mentioned and everyone is experiencing in their own ways, these are unprecedented times to the world as well as our company. Although the future is uncertain, the ability of our company to continue operating our business effectively with most of our employees working from their living rooms, kitchens, and home offices has been remarkable and gives me a real sense of pride to be part of such an amazing team. I would like to thank all of our employees for their tremendous support over these past unprecedented six weeks, getting the job done for us, our customers, suppliers and other stakeholders, while taking the appropriate steps to protect themselves and their families. And now, joining you from my own dining room table, I will provide you with our financial update. At the time of our last earnings call only nine weeks ago with two months under our belt and continuing the momentum from a strong 2019, we were feeling rather optimistic about our opportunities for the first quarter and the full 2020 year. Obviously, while we still performed quite well in the first quarter, much has changed since February and considering the unique circumstances we find ourselves in, I will provide more color than usual to help you better understand what we are experiencing in the marketplace today and how we believe it impacts our near-term outlook, including the actions we are taking to reduce expenses and maintain a strong liquidity position. As usual, please note that the following figures exclude the impact of pre-tax non-operational items in the first quarter as highlighted in our earnings release. The non-operational expenses in the first quarter were principally related to restructuring and acquisition-related items. To assist you in reconciling results published in our earnings release the breakdown of the non-operational items can be found on our webcast and on the last slide of today's webcast presentation. Now, I'll begin with some of the first quarter highlights. GAAP first quarter net income and earnings per share were $41 million and $0.63 per share, up 11% and 15% respectively year-over-year. Adjusted first quarter net income and earnings per share were $44 million and $0.67 per share, up 12% and 16% respectively, and adjusted EBITDA for the first quarter was $95 million. And we completed the acquisition of UVair in early March, which complements our business in General Aviation platform that we expect to rebound from the COVID-19 crisis sooner than our Commercial Aviation business. Consolidated revenue for the first quarter was $8 billion. That's down 8% compared to the first quarter of 2019, principally driven by lower fuel prices. As reflected in our earnings release, revenues for our Aviation and Land segments were generally impacted similarly due to lower fuel prices, while Marine revenues increased year-over-year principally because of the significant shift to higher-priced low-sulfur fuel oil in the first quarter. Our Aviation segment volume was 1.8 billion gallons in the first quarter. This volume decreased 6% year-over-year, principally due to the significant decline in activity in our Commercial Aviation business during the last month of the quarter resulting from the pandemic's impact on air travel. With commercial airline activity remaining at a virtual standstill in much of the world, we expect a more significant decline in related business activity in the second quarter with volumes anticipated to decline approximately 65% sequentially and 70% year-over-year. Volume in our Marine segment for the first quarter was 4.9 million metric tons, down 300,000 metric tons or 6% year-over-year. Sequentially Marine volume was only down 4% despite the negative impact from the pandemic in certain parts of the Marine business in the latter part of the quarter. While to date we have not experienced the same level of decline in our Marine business as we have in Aviation, we still expect a more meaningful decline in volume in the second quarter due to the continuing effects of the crisis. Our Land segment volume was 1.4 billion gallons or gallon equivalents during the first quarter. That's an increase of approximately 3% compared to the first quarter of last year. While our Land segment did not experience a significant impact of volume in the first quarter, we do expect a meaningful decline in the second quarter most significantly due to the drop-off in retail gas and diesel activity in North America as a result of the stay-at-home orders in effect throughout much of the U.S. as well as lower demand from our commercial and industrial customers. Consolidated gross profit for the first quarter was $259 million, an increase of $7 million or 3% compared to the first quarter of 2019. The Aviation segment contributed $93 million of gross profit in the first quarter. That's down significantly year-over-year as well as sequentially driven principally by the impact of the pandemic on commercial aviation activity in the latter part of the quarter and a decline in government-related activity in Afghanistan. While the extraordinary impact of the current crisis on commercial aviation activity is continuing we have been experiencing strength in areas such as air cargo and are seeing a somewhat milder decline in business aviation activity as compared to commercial aviation. Based upon the current state of affairs impacting the commercial aviation market as well as an anticipated decline in government-related activity in Afghanistan, we expect aviation gross profit will be down by more than 30% sequentially with the second half of the year remaining unclear and to a great extent dependent upon when the world begins opening up and when any continuing restrictions on air travel are lifted. The Marine segment generated first quarter gross profit of $59 million, an increase of $24 million year-over-year. Despite a drop-off in March related to the pandemic, this represents the highest level of Marine quarterly gross profit in more than five years. The significant year-over-year gross profit increase was related to strong results in our core resale activity driven principally by market volatility related to the transition from high-sulfur to low-sulfur fuel oil as a result of the new regulations that went into effect on January 1 and a simply fantastic effort by our global marine team. As we look to the second quarter, we expect Marine gross profit to be more meaningfully impacted by both the coronavirus situation as well as substantially lower fuel prices, particularly low-sulfur fuel oil. We expect this will result in a significant sequential decline in gross profit but we still expect second quarter results to be generally in line with the second quarter of 2019. Our Land segment delivered gross profit of $106 million in the first quarter. That's an increase of $4 million or 4% year-over-year. The year-over-year increase was principally driven by improved results in the U.K. as well as continued growth in our World Kinect Energy Services business. A portion of non-fuel related Land gross profit generated by MultiService was just under $21 million in the first quarter. That's an increase of 10% year-over-year. Looking ahead to the second quarter, we expect a material sequential decline in Land profitability related to traditional seasonality and, of course, the pandemic which is most meaningfully impacting our retail gasoline and diesel business activities in the U.S. but also impacting other parts of our Land business as well. Core operating expenses, which exclude bad debt expense, were $175 million in the first quarter, down nearly $30 million sequentially and well below the guidance provided on last quarter's call. We made immediate cost-related decisions as the coronavirus pandemic began impacting our business activity. These measures include a global hiring freeze and travel ban, the postponement or elimination of all non-essential projects and initiatives, and a significant reduction in discretionary spending including professional fees and marketing expenses. We are also substantially reducing capital expenditures, which had been planned for the year. Considering the present circumstances and continued economic uncertainty for the balance of the year we are actively focused on identifying further opportunities to reduce expenses and therefore expect second quarter core operating expenses to decline an additional $15 million to $20 million sequentially. Adjusted income from operations for the first quarter was $74 million, up $1 million over 2019. While we normally do not provide broad operating income guidance, we believe that with many of the travel restrictions and stay-at-home orders still in effect throughout much of the U.S. and many parts of the world as we head into the month of May, present circumstances will likely result in little to no operating income in the second quarter with EBITDA expected to decline by more than 60% sequentially. While we believe that a full recovery from the effects of the pandemic will take quite some time we are optimistic that as the world turns the corner and economic activity returns we will begin seeing improvements in our results. First quarter interest expense was $16 million. That's down 20% year-over-year. Our total interest expense continues to benefit from lower interest rates and we took steps to ensure that we keep interest costs down by fixing a portion of our debt at a near record-low rate during the first quarter for a five-year period. As the adverse effects of COVID-19 on the global economy have become more pronounced we have made a conscious decision to maintain a more significant cash balance for the time being during this uncertain period, which has increased our gross debt position and therefore interest expense may increase slightly in the second quarter. Our net debt increased to $662 million in the first quarter, driven principally by the funding of the UVair acquisition and repurchases of our common stock prior to the onset of the negative impacts of the coronavirus crisis. Our effective tax rate in the first quarter was 27.5%, which is effectively flat as compared to the first quarter of 2019 and we currently expect our full-year rate to be approximately the same. Our tax team continues to do a fabulous job managing the complexities of U.S. tax reform and other global tax jurisdictions with our effective tax rate now below 30% as previously projected. Our total accounts receivable balance declined to $2 billion at the end of the first quarter. That's down approximately $900 million from year-end driven principally by volume declines and significantly lower fuel prices experienced during the first quarter. Obviously, this crisis is putting a strain on many businesses across the globe both large and small, global and regional spanning nearly all industries, including many of our customers across all three of our reportable segments. While we continue to manage COVID-19 related risks very carefully and are working closely with our customers to ensure we minimize losses, it is quite possible that our bad debt will increase over the balance of the year. But this remains dependent on several factors, including government and other forms of support being sought out by many of our customers and the timing of an economic rebound. We generated $10 million of operating cash flow during the first quarter. While fuel prices declined during the quarter with many customers meaningfully affected by the crisis, receivable days outstanding increased reducing our collections-related cash flows and therefore reducing our overall cash flow for the first quarter. It is obviously very important to address our overall liquidity position in this period of uncertainty. Due to strong working capital management and a successful renegotiation of our credit facilities in 2019 we ended the year with the highest level of liquidity in company history. As a matter of fact, even as of March 31, when we closed the first quarter, we had more than $1 billion of available liquidity putting ourselves in a position of strength as this crisis unfolded. And we continue to carefully manage our cash flows to ensure our liquidity position remains as strong as possible throughout this complicated and unpredictable time period. Our Treasury and Finance organizations are working with the business more closely than ever to ensure every dollar invested in working capital, capital expenditures, or even operating expenses is warranted. Considering record low fuel prices and reduced demand, we expect our working capital requirements to decline further in the second quarter. As a reminder, our available liquidity is impacted not only by our cash flow but also the financial ratios in our credit facility, which are tied to metrics such as the level of EBITDA we generate. This is yet another reason why we are laser-focused on reducing costs as well in order to deliver the best possible EBITDA results under present circumstances. In closing, we are all living through a crisis which none of us could have ever imagined. As a company, we are very proud of what we have been able to accomplish under these trying circumstances. Again, we entered this crisis with our strongest balance sheet ever and solid performance and increasing returns in 2019 and the first two months of this year and we are confident we will come out stronger on the other side. We are reducing expenses and managing cash prudently while carefully navigating through what is certainly a complex operating environment while at the same time continuing to do all we can to support our employees, their families and our customers. While our financial results will clearly be impacted significantly in 2020 we remain confident in our business model and our spirits remain quite strong. Thank you and please be safe. I would now like to turn the call over to Kevin, our operator for Q&A. Thanks again.

Operator instructions: Our first question is from Ben Nolan with Stifel. And that line is open.

You missed a fantastic question. Now I'm going to screw it up, I'm sure. So, I did want to ask, first of all, I appreciate the additional guidance that was given with respect to volumes and margins, that's very helpful on my end. I did want to ask how you are seeing or how you would envision operating margins in this kind of an environment? Obviously, in normal circumstances when demand has diminished you can maybe also anticipate there being pressure on operating margins, but these aren't normal circumstances. So any thinking, maybe segment-by-segment whether or not there might be any compression of those operating margins?

It's going to vary, Ben. As you know by now, it's a diverse business model and we have a lot of things going on, all for the purpose of supplying energy globally to a diverse group of end customers, with the commonality being moving that liquid or gas or power — whoever the case may be — either third-party, our own inventory distribution assets, or using e-com or fuel cards or online transaction processing. So it's going to be really across the board. There are a lot of different requirements that folks have in terms of different disruptions to the supply chain; some parts of the supply chain are overstressed and there is significantly greater demand in some areas. So in some cases, there are going to be increases of demand where supply chains are going to be stressed that generally implies some higher margins. You've got other parts of the market where there is an evaporation of demand and an excess of supply, and there's certainly plenty of that. There are some opportunities where you are going to have some compression. Coming out of this, which we will come out of, the main airlines will fly, cruises will cruise, people will want to take a cruise. I'll take a cruise; I'll be flying around. The world wants to get back to its life. So you are going to see, I think coming out of this, perhaps fewer stronger companies with demand as it will gradually come out; you've got an oversupplied market, you've had that for quite some time. So it is going to be a scenario of the companies that are lean — the companies that have used automation and have efficiencies. Certainly this experience has shown us a lot of efficiencies in terms of what we don't have to do and reducing cost in terms of real estate and any number of different ways that we'll look at becoming lean. We had a running start going into this having gone through some of the previous downturns in marine and the energy complex. So we didn't really have very many pre-existing conditions. In any case, operating leverage is the name of the game. You've seen that we've exited some businesses in sharpening the portfolio, so continuing to take cost out and this is another opportunity to really focus on that. I'm sure Ira will have some other color that he'd probably want to give on operating leverage and operating ratios, but within the end businesses, it's really going to be across the board; there will be some volatility. You have a good amount of supply destruction. Supply may be more venial in terms of bringing that back even though you've got fracking, which is more OpEx than CapEx. You are going to see demand come back and as soon as it does come back, you're going to see it recover, I believe sooner than you will supply. So there will be some opportunities there, but Ira perhaps you want to give a little bit of color just in terms of general operating leverage before the pandemic and what it looks like now?

Sure. Well, I think Ben's probably familiar with where we were heading in. Obviously, some of the metrics I shared on Q2 would imply that those margins are going to be impacted significantly in the short term. But assuming the world starts moving again, we see those metrics starting to improve hopefully in the second half of the year. I would say Marine will probably be impacted the least in that regard because it's a lean and mean, highly centralized business with more of an impact in Aviation and Land. I will say though that Land had a phenomenally strong quarter in Q1, probably one of the best quarters they've had in a very long time. So I think Land, which has been underperforming from an operating margin perspective, was starting to catch up. And I think despite the short-term setback impacted by the coronavirus, Land will likely come out of this stronger from an operating margin perspective, whether that's in the third quarter or the fourth quarter — none of us really know at this point. But I believe a lot of the things that we've been doing to help drive improvements and efficiencies in the Land business, in rationalizing the related portfolio, have started to kick in. Unfortunately, bad timing for Land in terms of the pandemic, but I think coming out of it, Land's operating margin should be stronger.

And then, I just had two more quick questions. The first is with respect to capital allocation. You made a point of calling out the need for liquidity, which is absolutely understandable in this kind of environment. But I think Mike, you might have or Ira, you might have talked about that as we come out of this, you could see — envision an environment where there are fewer competitors to make sense, but is this the kind of environment where you are sort of value-shopping a little bit? If somebody doesn't have the same liquidity or balance sheet that you do, and maybe an opportunity to do some countercyclical acquisitions? Or is it really just protect the balance sheet, no matter what?

We're always open for business. There will be opportunities without question. We've been exhibiting some forbearance with our clients that we believe will survive. I'm just going to take the opportunity to talk about the transformation from underwriting and being a market maker to being a strategic and — I'd like to believe and I think it is true — one of the more sophisticated physical operators in the market today and that has given us a better portfolio. So our counterparty risk is enhanced because of working the portfolio as we add — you saw our Marine business volume go down because we've been more selective and the same with Aviation. So as it relates to folks within the supply chain that for whatever reason think that the future may be better not being a private owner of a company or if there are other opportunities in the marketplace that people for whatever reason didn't have similar sort of balance sheet or capability, we certainly would consider that. It's not obviously top of the list. Top of the list is safety of our employees, liquidity, and protecting the franchise and the enterprise, but there will be opportunities that will make sense. So we'll certainly evaluate them as we would any opportunity.

And then lastly for me, speaking of the situations that developed, one of the biggest Singapore-based marine fuel bunkering companies is going through some restructuring now and all sorts of crazy things going on over there. I know that in the past when some of your competitors in the Marine side have gone through these situations that either created opportunities or risks. I was curious if you have any color with respect to that ocean tankers business in Singapore, whether or not there is any exposure or opportunity?

Virtually none, so de minimis, very, very de minimis. So we did a lot of business with them — I think the third largest supplier there. So we wish them the best. They provided a good service but for us virtually no exposure.

Next question is from Ken Hoexter with Bank of America. Please go ahead.

So during the Great Recession you talked about managing the days sales outstanding and for some customers you would shrink the payable days. Ultimately, if need be maybe even prepay some of the fuel. Maybe can you talk a bit about how you're reacting to the customers? Have you started to look at that? Have you shrunk any kind of days sales outstanding? And how have you reacted to the market change? Thanks.

Well, it's a little bit different this time around. Certainly on the Aviation side, we've managed to have excellent engagement with our aviation clients. I think that we're very encouraged and when you look at how the world deals with these from 9/11 to '08, there's a lot more experience in the world. I mentioned our annual hurricane preparation and business continuity but central banks, the Fed, SBA — there's been an incredible and quick response. Whether that's a good thing, the world is getting better at dealing with these shocks. I think it's been encouraging within the larger airlines that we deal with and now the government support that they're having, so we've managed to deal with them in the appropriate way. That doesn't necessarily mean that we're reducing our DSO because a lot of them aren't flying. So a lot of it is understanding what arrangements are being made for us to continue to support them. We are a strategic and valuable partner and supplier for many of these companies. We deal with their physical operations, so it's a little bit of a different story from what it used to be. We've transitioned significantly to be a strategic and operational partner to these clients. There's a certain co-dependency which is not a terrible thing. As it relates to the rest of our portfolio, it has not been really bringing in the terms in terms of days. We've certainly looked at credit — credit lines are significantly lower because of the price of oil so our exposures have shrunk significantly because of that. So that's a good thing. This one is a little bit different. This is not the Financial Crisis. It was a health crisis that turned into an economic crisis where you had an instantaneous evaporation of demand combined with an oil war. So it's pretty crazy but we've managed to navigate that and really deal with the exposure. It's less about the terms and really about understanding what our exposures are and who are the folks that we're going to continue to support through the downturn. I think we've done a very good job. Our underwriting team I think is superb. Ira, maybe you want to give a little bit of color in terms of how that's working through just the balance sheet, the P&L and all of that. Do you want to give Ken a little bit more color on that perhaps?

Yes, you've provided him with a lot. So I won't add that much Ken. But obviously, the period you are referring to was a period when oil skyrocketed to $147 a barrel and everyone was using a lot of cash from working capital. Right now working capital is shrinking because of price and activity. So as Mike indicated, very different set of circumstances. So it's really more about working with our customers that may owe us some money that are not necessarily operating right now and helping as best we can. And there are certainly situations where businesses are still operating, the credit profile has changed and we may bring in terms here and there, but it's nothing like what we experienced back in 2008. I mean, literally today's fuel price is a fraction of what it was during that crisis in 2008. So a very different set of circumstances. So working capital should continue to decline over the next few months or until the world starts to come back online. That's a positive. That's the one positive to us from a liquidity standpoint regardless of what terms are — purely because of price and volume.

Great. Thanks for that. Now, thinking about your second quarter outlook Ira, appreciate all the thoughts and guidance you provided there. Maybe just talk a little bit about your assumptions in that, a little bit more and then your thoughts on cash generation in the second quarter, right? If I look at cash from operations even excluding UVair would you expect to be — you mentioned operating income breakeven. Would you then expect to be cash flow negative in the second quarter given that?

No, so if that's the principal part of your question, we should generate cash again. You've got much lower volumes expected as I articulated for Q2 and assuming prices remain — they jumped up a little bit this afternoon; they were $13 this morning and crude was $18 by the end of the day. But assuming prices remain in this very low environment, the combination of low price and low volume should reduce our working capital position pretty meaningfully. Obviously, we still have some of the impacts of payments not coming in as quickly as they would under a healthier set of circumstances. But despite that, we should generate cash in the second quarter. I can't tell you exactly how much because that's a moving target. But we expect to be cash positive despite not necessarily generating any operating income.

Okay. And then maybe just delve into Marine a bit. Maybe your thoughts on the spread between fuel types — probably just a follow-on. I'm trying to figure out if Mike was mentioning that the gap has narrowed. So does that mean this run in strength of profitability has ended or is that irrespective of that gap? I just want to understand whether you could walk us through a little bit on the spread of fuel prices and what that means for your profitability and business?

Marine is the one business that has a much larger spot portion of its portfolio, meaning we're out there competing for business every day. There was obviously a bunch of volatility around the transition on the first of the year and we were transitioning to a fuel type that was running at $500 to $600 a ton which was substantially higher than the fuel we were selling before. The combination of the volatility around the change and the substantially higher price contributed to profitability and the strength that we saw in the first quarter. I would say that's kind of been squashed to some extent by everything else going on in the world. There's been less conversation and focus on those dynamics. But the one certainty is that because of the significant drop in crude, the price of low-sulfur fuel oil has collapsed too. I think it was $220 yesterday so hundreds of dollars less per ton than where we started at the beginning of the first quarter. So that combined with cruise lines not sailing and other parts of the markets that we serve — Marine being impacted by the pandemic — all that will contribute to a fairly meaningful sequential decline in Marine in the second quarter.

With everything, Ken, there's pluses and minuses all over the place. While lower price obviously is going to have some impact and lower demand that's going to be offset to some extent by some risk premiums. Because it's all about counterparty risk within the supply chain. There are a lot of small and medium-sized companies and private companies. So I think people are going to be pretty careful in terms of how they do business, who they do business with and there's still obviously a material amount of risk in the marketplace.

Appreciate that guys. Just my last one Ira, I just want to make sure. I understand what you were saying before when you said obviously some of our covenants are based on EBITDA, were you talking about the shrink to your available liquidity or were you suggesting to pay back some of the debt? I just want to understand maybe if you can just clarify for me what you meant by that comment?

Yes. The principal covenant that we live by day in and day out, which governs the amount of liquidity that we technically have available under the covenants, is the level of debt we have relative to our EBITDA. So if our EBITDA shrinks, which it clearly will in 2020, that has an impact on our overall liquidity. Now, the glass half full is that we should be generating cash from the reduced price and volume environment to offset a lot of that, but obviously it depends on how much EBITDA does decline. It's a common covenant amongst just about anyone that has a general banking facility that they utilize to run their business.

Yes. No, understood. I just wanted to understand what you were mentioning there. All right, guys, appreciate the time.

There are no further questions. I'll turn the call back to you.

Okay. Well, thank you everyone for listening. It's certainly the craziest of times. I'm optimistic about the world. You've got hundreds of thousands of researchers and doctors, medical professionals working on this global puzzle of solving this crisis and we will get through this and there will be the other side, so we're optimistic. We feel like we'll come out stronger having gone through it. If it doesn't kill you, it makes you stronger. I started my Marine career in 1985 and it was the worst shipping market and it was the worst energy market. And it actually taught me a lot about what to do and how to get through things. So we've been through these before. Not exactly like this one. But we'll come out of this and we'll continue to obviously focus on the short-term imperatives, but we're not going to lose sight of what the agenda is. Certainly our sustainability initiatives are important. In some ways you're seeing that sustainability has gotten a boost. A lot of people are thinking about that, and all of the rest of the initiatives we're committed to — ESG and all of those — we will continue to focus on. Obviously, we've got an urgent issue right now, and that's what we're focused on. It's everybody at battle stations. So our company is working well. Once again, I just want to thank our tremendous team. It's been wonderful to be working more closely. It's ironic that we're working more closely than ever before. So anyway, stay healthy to our investors and shareholders and all of our supporters. We really thank you for all your support during this. And to our customers, we've had great conversations, great engagement. We'll all get through this. We're all looking forward to getting back to our lives. It will happen. In the meantime, stay safe. We look forward to talking to you next quarter. Thanks very much.

That does conclude our conference call for today.