World Kinect (NYSE:WKC) executives said the company opened fiscal 2026 with results that exceeded internal expectations, citing strong execution in volatile energy markets and continued progress on a portfolio optimization strategy that has included exits from lower-return activities.
Chief Executive Officer Ira Birns said the quarter unfolded amid “a far more volatile and unpredictable environment than anyone could have expected,” pointing to rapidly shifting conditions following an escalation of conflict in the Middle East. Birns said teams managed sharp price movements, logistical challenges, and tightening market conditions while maintaining focus on customer service and risk management.
Company highlights brand shift, continued portfolio simplification
Birns also reiterated that the company’s exits from “non-core and lower-margin activities,” particularly in the land segment, have improved financial flexibility and enabled a sharper focus on areas with “more predictable, durable, and attractive returns.” He said the simplification effort is designed to concentrate on core activities that benefit from scale and generate solid returns.
First-quarter results: lower volumes, higher gross profit
Executive Vice President and Chief Financial Officer Mike Tejada said management discussed results on a non-GAAP basis, noting total non-GAAP adjustments in the first quarter of approximately $16 million, or $13 million after tax.
On a consolidated basis, Tejada said first-quarter volume was 4 billion gallons, down 6% year over year. Gross profit increased to $254 million, up 10% from the prior year and “above our expectations going into the quarter,” he said.
Operating expenses were $181 million, up 2% year over year, reflecting the inclusion of the Universal Trip Support Services business and higher variable compensation tied in part to strong first-quarter results, Tejada said. Net interest expense was $26 million, up from the prior year, driven by lower interest income and additional working capital requirements as prices increased.
Marine segment posts one of its best quarters amid price spike
Management pointed to the marine business as the principal driver of first-quarter upside. Tejada said marine volume was approximately 4 million metric tons, up 4% year over year, while gross profit was $66 million, up 86% year over year. He called it the company’s “third-best quarter on record for marine.”
Tejada said the company entered the quarter expecting a low-price, lower-volatility environment, but conditions shifted sharply in March. He said volatility increased and average bunker prices rose approximately 70% month over month. Birns later added that average marine product prices “at the peak doubled in March versus February’s average,” and then “backed off about 20% from that max in April,” while remaining above February levels.
Both Birns and Tejada emphasized that performance was not simply driven by the market move; they credited “disciplined risk management” and execution under pressure, including managing pricing, credit exposure, and operational risk while continuing to supply customers. Tejada said the “spot nature of the business” can position marine to perform well when prices rise, credit availability tightens, and volatility increases.
Looking to the second quarter, Tejada said the company expects marine gross profit to be lower sequentially as price and volatility moderate, but still “meaningfully higher year-over-year.”
Aviation benefits from Universal Trip Support and market-driven opportunities
In aviation, Tejada said first-quarter volume declined 5%, as expected. Aviation gross profit was $138 million, up 20% year over year and “ahead of our expectations heading into the quarter.” He said the year-over-year increase was driven “primarily by the Universal Trip Support acquisition,” which closed in November and is “performing as planned.”
Tejada also said core aviation results exceeded expectations due to favorable market conditions that created short-term opportunities in commercial aviation and drove increased government-related activity.
During the Q&A, Tejada said aviation gross profit per gallon was influenced by Universal Trip Support because it is a services business with “no volume associated with that,” which can lift gross margin on a per-unit basis. He also noted some spot activity, including “some COVID-related activity,” though he said it was not a massive part of the business.
Birns said aviation seasonality remains intact, with the company typically seeing a weaker first quarter, improvement in the second, a peak in the third, and a decline in the fourth. However, President John Rau said the company has seen “a lot of the airlines announcing schedule reductions,” which could offset some anticipated third-quarter growth. Birns referenced Lufthansa as an example of an airline announcing flight cutbacks as a precautionary move.
Tejada said that heading into the second quarter, the company expects aviation gross profit to be up sequentially due to seasonal activity and continued contribution from the market environment, and up year over year with Universal Trip Support included.
Land segment reflects portfolio exits; core performance cited as improving
Tejada said land results were in line with expectations, with volume and gross profit down 15% and 38% year over year, respectively, reflecting portfolio actions and business exits. He said remaining exit-related activities are progressing as planned and are expected to be “materially complete by the end of the second quarter.”
Within land, Tejada said the company’s “car, truck, and utility” business performed well, benefiting from disciplined yield management that helped margins keep pace with higher working capital costs and credit requirements in a rising interest rate environment. Those results were offset by the natural gas business, which was “negatively impacted by severe weather in the Midwest in January,” he said.
For the second quarter, Tejada said land gross profit is expected to be up sequentially but down versus the prior year due mainly to the businesses the company has exited or is exiting. He added that the company expects core land businesses to improve and drive year-over-year growth, with operating income “still on track to nearly double” and operating margin improving “significantly toward our 30% target for 2026.”
Guidance raised; cash flow pressured by working capital needs
Tejada said the company is providing full-year adjusted EPS guidance for 2026. For the full year, World Kinect raised adjusted EPS guidance to $2.65 to $2.85 per share, up from $2.20 to $2.40 per share. He said the increase “reflects our overperformance to date,” while baseline expectations for the rest of the year “remain on track.”
In response to an analyst question about the implied step-down in quarterly earnings after the strong first quarter, Tejada said the guidance framework reflects first-quarter overperformance while “maintaining where we were before for the balance of the year.” Birns said the company was “playing it safe” by assuming the rest of the year tracks the forecast made before the conflict began, while acknowledging potential upside if volatility persists.
Tejada reported first-quarter operating cash flow of -$46 million and free cash flow of -$60 million, driven mainly by higher commodity prices and the related working capital impact. He said the company expects prices to normalize over coming quarters and remains positioned with strong liquidity to deliver positive free cash flow in 2026, consistent with prior years.
Tejada also said the company returned $86 million of capital to shareholders in the first quarter through dividends and share repurchases, including a $75 million share repurchase completed in January.
Credit management a focus amid higher prices
During the Q&A, Birns said the company’s first quarter required “hand-to-hand combat, customer by customer,” as rising fuel prices increased the credit required to support customer volumes. He said the company evaluates credit decisions individually and has “stepped up” its focus on credit and related risk given the growth in balances tied to higher prices, adding that the company monitors exposure on a day-to-day basis.
In closing remarks, Birns said the company is entering the remainder of the year as a “simpler, more focused business” built on scale, disciplined risk management, and a strong balance sheet, and that management believes the company’s story is becoming clearer as exits and transformation efforts near completion.
About World Kinect (NYSE:WKC)
World Kinect Energy Services, Inc (NYSE: WKC) is a global energy services company specializing in fuel procurement, supply chain management and risk mitigation solutions. The company offers an integrated platform that facilitates the sourcing, trading and logistics of refined fuels, natural gas, liquefied natural gas (LNG) and renewable energy products. Its services are designed to help industrial, commercial and institutional clients optimize energy costs, comply with environmental regulations and manage price volatility.
In addition to traditional commodity trading and delivery, World Kinect provides a suite of value-added services that include carbon offset and decarbonization strategies, energy efficiency consulting and emissions reporting.
