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World Fuel Services Corp (NYSE:INT)
Q4 2020 Earnings Call
Feb 25, 2021, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you standing by, and welcome to the World Fuel Services Fourth Quarter and Full Year 2020 Earnings Conference Call. My name is Mike, and I'll be coordinating the call for this evening. [Operator Instructions]

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.

Glenn Klevitz -- Vice President, Assistant Treasurer

Thank you, Mike. Good evening, everyone, and welcome to the World Fuel Services fourth quarter and Full Year 2020 Earnings Conference Call. I'm Glenn Klevitz, and I'll be doing the introductions on this evening's call alongside our slide presentation.. This call is also available via webcast. To access this webcast or future webcasts, please visit the World Fuel Services Corporation 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 I 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 of these provisions to the 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 will begin with several minutes of prepared remarks, which will then be followed by a question-and-answer period. As with prior conference calls, we have set 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.

Ira M. Birns -- Executive Vice President and Chief Financial Officer

This is Ira Birns. My apologies. Before Mike begins, operator, we've been informed that we still have music playing while Glenn was speaking. Could you please ensure that, that's shut off ASAP before Mike begins? We'll be with you in a few minutes. Sorry for the delay. Can you hear the music? Yes. So I give us a couple more minutes. Our sincere apologies, we're still try to work -- working how with the conference call [Indecipherable] shut off the music. Sorry about that. We'll be with you in a minute or two.

Operator

Pardon the interruption. I'm not hearing music on my end. Is anyone still hearing music?

Michael J. Kasbar -- Chairman and Chief Executive Officer

Okay, we're back on. Sorry for the delay. So it's the music, but hopefully, everybody can hear. If not please figure out a way to contact us. So we're assuming everyone's hearing. So thank you, Glenn, and good evening, everyone. It's good to be here today. As we all know, it's been a year like no other. It was a year when our company, our country and the world were challenged in ways never before experienced. It was also a year in which we learned a lot about ourselves and each other, about how we respond to emergencies, to rapid change, to having our personal and business lives turned upside down, and the health of our family and employees put at risk. The pandemic impacted some businesses more than others. Please support the industries that have been among the most impacted.

The World Fuel was the ultimate stress test, and I could not be more pleased with and proud of the incredible job our global teams did during this extraordinarily challenging year. We did not miss a beat for our customers or suppliers in any part of our business activity or in all part of our global operations, not one. We absorbed risk, performed our operations with excellence and improved our safety metrics along the way. We maintained and enhanced our commercial, operational and financial position as the counterparty of choice to the global aviation marine and land-based industries. I could not be more proud of the dedication and efforts of our team and the outcomes they drove in this difficult, risky and volatile year.

We have been fire-tested and are stronger for it. Today, all of our businesses are strong, healthy employees to respond to the resurgence in passenger travel and commercial activity in aviation, marine and land as local and global markets reopen. The work that we have done over the year on talent, leadership and culture has better positioned us to execute on delivering and scaling our existing diverse energy and last half-mile logistic solutions to end users. Our aviation, marine and land businesses continue to refine and enhance their offerings and expand their global networks. We have clearly demonstrated -- they clearly demonstrated there's strategic value in their markets during the most successful -- I'm sorry, stressful time in history. Our energy management business continued to evolve its natural gas, power, wind, solar, carbon and renewables activities, and as I said last quarter, this business is breaking into stide. We provided robust energy management advisory services to a broad base of locally rolled businesses in 55 countries. We sourced renewable energy from our portfolio of 190 renewable power plants. We concluded solar power agreements with various communities as well as agreements with utility-scale solar projects for Fortune 500 companies.

We've managed and sold growing volumes of electricity and natural gas. Throughout all of our businesses, we were supporting our clients' pathways to lowering their carbon footprint and meeting their growing ESG agendas by procuring and selling carbon credits, sustainable aviation fuel and renewable diesel. As I said last quarter, the reception from the market to our sustainability offerings did accelerate. Society has passed the tipping point on climate action, and we are well positioned to serve the sustainability needs of the market. Last quarter, I mentioned our generated military activity and the synergy of our commercial activities. While our core in-theater business has experienced substantial declines as a result of troop withdrawals in Afghanistan, I am confident we will be building out a more diverse portfolio of business activities within this sector, which leverages our commercial, operational and expeditionary capabilities.

As I have said in the past, our military activity and expertise has positively influenced our commercial practices. And the military veterans that work shoulder to shoulder within their organization continue to help us drive operational excellence. We are grateful for your service and contribution to our success, and are committed to hiring and supporting military service members throughout our global organization. In addition to participating in what is rapidly moving from an energy transition to an energy revolution, we are also participating in the digital transition. We are digitizing more transactions, documents and communications every day and moving hundreds of suppliers and customers to our PPIs and portal solutions, all with the purpose of reducing costs, lowering ours and our customers' and suppliers' partner footprint and increasing the value by improving operational integration with the markets we serve.

We are taking our large and liquid analog transportation fuel marketplace and turning it into a digital energy ecosystem, and we're doing this with smaller teams and better performance as a function of focusing on diverse talent and thinking, and a collaborative culture. In 2020, our global team showed great strength of character, tremendous resilience, uncountered grit and a relentless determination and burning desire to do well. I want to sincerely thank each of every one of you. Now I'll turn the call over to Ira for a financial review, followed by Q&A.

Ira M. Birns -- Executive Vice President and Chief Financial Officer

Thanks, Mike. Good evening. Ladies and gentlemen, I hope you enjoyed the extra music. Sorry about that again. But before I begin my financial review, I would also like to reiterate Mike's sentiments. And send a special thank you to our global team who adapted quickly to a rapidly changing environment and support our business with tremendous strategy throughout 2020. Last year was one that brought unforeseeable challenges to our business in the markets we serve. But we couldn't be prouder of what our company has accomplished in the face of such extraordinary challenges. While uncertainty still looms, the proverbial light at the end of the tunnel seems to be creeping a bit closer. And we are very confident that our resilience business model will bounce back as the markets we serve begin to recover.

More positive news is coming out every day regarding vaccination rates and trends in COVID activity and the progress that is being made should be very encouraging to us all. I'll provide additional details regarding what we have done to strengthen our company during 2020 as I give a more detailed review of our fourth quarter and full year financial results. As usual, please note that the following figures exclude the impact of nonoperational items as highlighted in our news release. The nonoperational income and expense items for the quarter and full year, principally relate to the gain on the sale of our multi-service business, most of which was recorded in the third quarter, as well as our acquisition, divestiture, impairment and restructuring-related expenses. To assist you with reconciling results published in our earnings release, the breakdown of the nonoperational items can be found on our website and on the last slide of today's webcast presentation.

Now let's begin with some of the fourth quarter and full year highlights. Consolidated volumes for the fourth quarter increased 3.5% sequentially to 3.5 billion gallons. For the full year, our consolidated volume was 14.4 billion gallons, that's down approximately 26% compared to 2019, mostly related to the pandemic's impact on our commercial aviation business. Adjusted fourth quarter net income and earnings per share were $1 million and $0.02 per share, respectively. And adjusted full year net income and earnings per share were $74 million to $1.15 per share for seven weeks. Adjusted EBITDA was $45 million in the fourth quarter and $261 million for the full year. And lastly, we generated another $114 million of cash flow from operations during the fourth quarter which contributed to a record $604 million of cash flow from operations for the full year, further strengthening our balance sheet amid the ongoing and pandemic. And now consolidated revenues for the fourth quarter was $4.7 billion, again, negatively impacted by the continued effects of COVID-19 on our segment volumes as well as a 25% decline in average fuel prices compared to 2019.

For the full year, consolidated revenue was $20.4 billion that's a decrease of $16.5 million or 45% when compared to 2019, with the decline driven by the same factors as the fourth quarter. Our aviation segment volume was 1.1 billion gallons in the fourth quarter, to actually up 12% sequentially, but still well below pre-COVID activity levels. Strength in cargo operations and business aviation was offset by continued weakness in global commercial passenger aviation activity. Fourth quarter spikes in COVID activity led to a reinstitution of mandated quarantines and other forms of travel restrictions in much of Europe, the Americas and even Asia. These restrictions are expected to remain in place for the balance of the first quarter. However, COVID cases, hospitalizations and vaccination rates all seem to finally be trending in the right direction, which should begin to result in relaxed travel restrictions. This is all leading to growing optimism for a reasonable recovery of commercial aviation activity, potentially beginning as early as sometime during the second quarter and into the third quarter of this year. For the full year, volume in our aviation segment was 4.7 billion gallons, that's a 3.8 million gallon decline or 45% compared to 2019, again, for the same obvious reasons. Volume in our earnings segment for the fourth quarter was 4.2 million metric tons and approximately 17% year-over-year and 3% sequentially.

The year-over-year declines were principally driven by weaker demand across the core resale in physical businesses. For the full year, our segment filing was 17.5 million metric tons, that's a decline of 3.4 million metric tons or 16% compared to 2019. Our land segment volume was 1.3 billion gallons or gallon equivalents during the fourth quarter. That's a decrease of only 11% year-over-year and an actual increase of 2% sequentially, generally good results considering the broad economic impact of the pandemic on our markets our land business serves. We experienced year-over-year COVID-related volume deployments in our retail, commercial and industrial and wholesale operations, which were partially offset by increases in our drilling power, natural gas and sustainability platform. Our land team remains focused on expanding our C&I power and natural gas and sustainability platforms and has done a great job managing our land business through the pandemic over the course of 2020. For the full year, volume on our land segment was 5.1 billion gallons, that's a decline of 390 million gallons or 7% compared to 2019. And consolidated volumes for the full year was 14.4 billion gallons, down 5.1 billion gallons or 26% year-over-year.

Consolidated gross profit for the fourth quarter was $165 million, that's a 42% decrease compared to the fourth quarter of 2019 and a 23% decrease sequentially. For the full year, consolidated gross profit was $852 million, down $260 million or 23%, both declines driven by the impact of the pandemic on our aviation and marine results. Our aviation segment contributed $70 million of gross profit in the fourth quarter, down 50% year-over-year and 28% sequentially. The reason for the year-over-year decline again is obvious, but we also experienced a sequential decline due in part to renewed travel restrictions in the fourth quarter, as mentioned earlier. These restrictions most significantly impacted our iron ore volumes that are serviced by our physical operating network in Europe. Also, our inventory business was negatively impacted by fuel price volatility during the quarter, and we also experienced a modest sequential decline in government-related activities related to well pump size Afghanistan troop withdrawals, mandated by the prior U.S. administration.

As we look ahead to the first quarter of 2021, we anticipate that aviation gross profit will remain flat sequentially, driven principally by continued lockdowns in many parts of Europe and other areas of the world, which, again, we expect will last through the balance of this quarter. For the full year, aviation gross profit was $353 million, a decline of $188 million or 36% year-over-year. The marine segment generated fourth quarter gross profit of $23 million, a 60% year-over-year decline and a 29% decline sequentially. The COVID-related year-over-year decline in core retail activity, including the [Indecipherable] sector, was compounded by a comparison to a very strong fourth quarter in 2019, and which has benefited from the lead out to the January one very [Indecipherable] IMO regulations. In addition to seasonality, the sequential decline related to lower margins we expected in our core retail activity and weakness in our physical business, impacted in part by COVID-19.

As we look ahead to the first quarter, based on what we've experienced year-to-date, we expect marine gross profit to increase sequentially, driven by a rebound in our higher-margin physical business and an increase in customer derivative-related activity. For the full year, the marine segment generated $151 million of gross profit, which is down $30 million or 17% compared to 2019. Our land segment delivered gross profit of $72 million in the fourth quarter, up 3% year-over-year and 11% sequentially when excluding profitability related to multi-service, which we sold at the end of the third quarter. While core domestic activity declined, land experienced sequential increases in our power and gas business as well as the benefit of seasonality in the U.K., again, a good outcome for land considering the impacts of COVID-19 on the markets they serve. Looking ahead to the first quarter, we expect land gross profit to be sequentially higher, principally related to the increase in activity in the U.K. as we expect people strength in our oil distribution activities, which began in the fourth quarter to continue through the first quarter, driven in part by assumed higher usage as a result of continuing pandemic-related lockdowns.

And some additional potential upside related to the recent volatility in the natural gas markets in parts in the U.S. For the full year, the land segment contributed gross profit of $348 million, after excluding the impact of multi-service, the land year-over-year decline was only $9 million or 3%. Core operating expenses, which exclude bad debt expense, were $135 million in the fourth quarter, which is well below the range that we provided on our last quarter's call, as we remain focused on managing our variable costs during this period of continuing uncertainty. Looking ahead to the first quarter, operating expenses, excluding bad debt expense, will likely be a bit higher in the range of $138 million to $142 million. If we look at the full year 2020, core operating expenses were $613 million that stand at $152 million or 20% when compared to 2019. By taking swift action to reduce our costs to better align the economic realities of 2020, we were able to mitigate more than 50% of the full year decline in gross profit. This is another testament of our team's focused effort to manage through the challenges the pandemic.

Speaking of the challenges with pandemic, the debt expense in the fourth quarter was $5.8 million, returning to a more normalized level after two quarters of COVID-related elevated expenses. We continue to navigate challenging markets well. Our credit team continues to do a fantastic job underwriting risk with credit lines remaining well below historical levels. As we look to 2021, we expect bad debt expense to return to levels at or below those experienced in 2018 and 2019, unless market conditions somehow deteriorate substantially from here. Adjusted income in operations for the fourth quarter was $25 million, down significantly from 2019 and sequentially, again, due to the impact of the pandemic on our aviation and marine segments, most specifically. For the full year, income from operations was $176 million, also down significantly, principally driven by the impact of COVID expenses. Fourth quarter interest expense was $12 million, which is down 30% year-over-year. While [Indecipherable] success continues to benefit from lower average borrowings and significantly low interest rates, interest expense increased sequentially as we ramped up our accounts receivable sales facility, which is further strengthening our liquidity profile. At the end of the fourth quarter, we again had no borrowing with outstanding under our revolver, and we ended the year in a net cash position.

We expect interest expense for the first quarter to be in the range of $10 million to $11 million. Other expenses were also elevated in the fourth quarter, principally related to foreign exchange losses driven by significant currency volatility during the quarter. As a result of the impact of the pandemic on our operations, we were required to post a fairly significant amount of valuation allowances against our deferred tax assets in various foreign jurisdictions during the fourth quarter. This resulted in a higher effective tax rate for the fourth quarter and even the full year. These noncash adjustments are required under tax accounting standards and procurements from recording a tax benefit on certain legal equity loss results which, again, will continue to be driven principally by the decrease in demand associated with travel restrictions imposed globally due to COVID-19.

The recorded devaluation allowance has no cash flow impact and our net operating loss carryforward assets remain available to offset future taxable income from these legal entities once they become profitable to get close to identical since we did not be able to recognize any tax benefit, and so we start showing profitability in these jurisdictions, our effective income tax rate may remain higher than we would like in the short term. If we normalize our rate for the impact of these allowances, our fourth quarter effective tax rate would have been somewhere in the low 30s. Based on what we know today, we expect our effective tax rates to be in a very similar range in 2021, unless the local market conditions change materially. Our total accounts receivable balance declined to about $1.2 billion at the end of the year, down more than 50% or approximately $1.7 billion from December of 2019, driven principally once again by volume declines and lower fuel prices.

Our continued focus on carefully managing working capital resulted in fourth quarter operating cash flow of $114 million. For the year, we generated more than $600 million of cash flow from operations, which have enabled us to repurchase $68 million of our shares and pay $26 million of dividends while still strengthening our balance sheet substantially, again during the midst of the pandemic. This provides us with a significant amount of available liquidity to invest in organic growth initiatives, a robust pipeline of strategic investments, additional share repurchases and dividends, all intended to drive greater shareholder value. In closing, as we all know, 2020 is a very tough and unprecedented year, not only for us as a company, but for the markets we participate in just about everybody else. While we do not control in business demand recoveries from COVID-19, operating remotely for almost the entire year now, our global team did an exceptional job focusing and executing on [Indecipherable] within our control.

Specifically, managing our expenses and cash flows and credit exposure to customers and other [Indecipherable] margins. And while EBITDA was still significantly impacted by the pandemic, these prudent actions further strengthened our balance sheet, reducing net debt by more than 578 million -- $575 million, bringing us in a net cash position at year-end. Looking forward, any state of crisis is a terrible thing to waste, and we worked very, very hard in 2020 to ensure we did not reach this horrible crisis. I believe we will comment to much strong and efficient business. With our balance sheet stronger than has been in a very long time, we are well positioned to hit the ground running as demand recovers post pandemic with significant capital available to invest to further strengthen multiple areas of our business with the greatest opportunities for growth and operating leverage. Thank you would please be safe. I would now like to turn the call over to not Mike, our CEO, but Mike our operator, for Q&A. Thank you.

Questions and Answers:

Operator

[Operator Instructions] And the first question comes from the line of Ken Hoexter from Bank of America.

Ken Hoexter -- Bank of America -- Analyst

Great job on balance -- managing the balance sheet during the pandemic. But looking forward with $60 oil, typically, lower fuel enables strong internal cash flow. And I know you've made some changes in what you talked about and how you manage the business, and you dramatically lowered your debt. But typically on rising fuel, you move to extend credit. How should we think about cash flow going forward in this rebounding environment and a rising fuel backdrop?

Ira M. Birns -- Executive Vice President and Chief Financial Officer

That's a good question, Tim. Thanks. Prices are a little bit higher. We've been managing our balance sheet really tightly. Our trade cycle blew out a bit in the midst of the pandemic. But it's back to more normalized single-digit levels. So $60 or so will not make much of a dent in terms of working capital and cash flows. The only way that it would have a more meaningful impact, I think we'd all be very happy if the recovery accelerates very quickly and we had a combination of higher prices and significantly more volumes. But even so, in relation to the amount of liquidity that we have available today, the impact from the combination of those two, I would still expecting that to be overly material. So we did reduce the cash flow opportunity that we would otherwise have, but not that high significant amount.

Ken Hoexter -- Bank of America -- Analyst

Okay. So it's not like a case where you see it going from generating significant cash to very thin cash because the price of crude goes up?

Ira M. Birns -- Executive Vice President and Chief Financial Officer

Look, it depends on how far the price goes up, and again, more specifically, If prices went way up now, today's depressed level of volumes, the impact would be a lot lower than if it was going up with the level of volumes we were servicing in 2019, right? So it's really a combo of the two. So again, if prices continue to accelerating and volume, which we began, we'd all be happy if that accelerated rapidly, that would create a scenario where cash flows may be diminished to a much lower level. But you would need that on both of that path.

Michael J. Kasbar -- Chairman and Chief Executive Officer

And Ken, a higher price is not totally negative. Obviously, there's a gasoline. But there's other dimensions to that, obviously, in terms of our underwriting and unit margin. So there's some sanitary effects to higher prices as well. And so to dimension as are value prop and value-add turns to there. So it's not really a point of concern at this stage.

Ken Hoexter -- Bank of America -- Analyst

Yes. And I'll just highlight that cash-generative you in with the debt we paid down. So Mike or Ira, where do you see the volumes first? Given you've been at the three segments for a while now with land, aviation and marine, are you seeing -- Ira, you mentioned a couple -- I think two of the three are going to see sequential upticks with aviation. I think it was aviation -- was quite sequentially -- but are there signs that you start to see at this point in the turnaround on the volume pickup that you look to first in seeing that? And I guess that blends to kind of how you saw bad debt move back down to a normalized level. But why don't we stick with the volume part of that question first?

Ira M. Birns -- Executive Vice President and Chief Financial Officer

Yes, anybody's guess, listening to the major airlines and they had to say, talking to air folks. We expect and we see some very modest signs of the commercial aviation volumes increasing slightly. Still, of course, nowhere near the levels where we started. We're assuming that it's a reasonable opportunity for that volume in aviation, which was the most significantly impacted, of course, to really accelerate more in the second half of the year. Again, still not expecting to get any renewal levels in 2018, but a whole lot better than where we were at the bottom in 2020. So again, that depends on what will transpire over the next couple of months with -- in terms of COVID rates, vaccination rates and the impact on travel restructurings. There's a lot of pent-up demand for travel life. Personally, I haven't been on a commercial aircraft in a year, for the first time, probably four decades, right?

And so there are a lot of people that once they're comfortable that it's safe to be out there that are looking to start booking at a bunch of plants. And that tide can start turning very quickly. I don't not think we're there yet, but when that time will start turning, aviation volumes will have the opportunity to accelerate pretty meaningfully. Again, not necessarily bring us back to where we started, unfortunately, overnight, but bringing us closer to where we were in '19. Land volumes didn't get impacted as much. And are marine volumes did get impacted as much. The real punch line of volume is aviation. And we're hoping, again, to see that number start moving north in the second quarter and the third quarter and in -- to the end of the year.

Michael J. Kasbar -- Chairman and Chief Executive Officer

We'll see, obviously, the cruise market was factored into aviation somewhat related but different and we continue -- tanker dry bulk is going to be more broader trying to be based. So as you see that start to pick up, you'll see some knock on effect there. On the land part in terms of our diesel activity and retail gasoline, that business is moving progressively and taking market share. So we feel good about that. And then the natural gas and [Indecipherable] business is growing. More natural gas than [Indecipherable], but you'll see us start to do a bit more activity in the power side as well. The heat oil, obviously, in the U.K. somewhat contained market. But some of it is the broader-based market of the economy coming back. I think you're seeing that the length is starting to kick in on some of the energy management business although that's small, we'll be looking to grow that business.

Operator

The next question comes from Ben Nolan from Stifel.

Ben Nolan -- Stifel -- Analyst

Yes, I wanted to dig in a little bit on a couple of things. The first is on the aviation business. Just kind of looking at it, the volumes were pretty similar, but the gross profit was off some. And I know you had mentioned Afghanistan. But just in keeping with sort of flat volumes, what was really the main -- or the pressure point on your margins in the aviation business? Or was it all Afghanistan?

Ira M. Birns -- Executive Vice President and Chief Financial Officer

Sure. Good question. And obviously, that one moves all clearly on a sequential basis. So three issues that I'll try to hit on in my prepared remarks that I'll elaborate on. The government piece is actually the smallest piece of the three. That was only off a little bit. We're talking about that for a little bit since we grew that showing some resiliency every time we think it's going away to [Indecipherable]. But obviously, with the change of administration now, you don't have the same level of excitement about trying to bring all the troops home. That seems to have waned and troops that remain may remain indefinitely. We don't know. So that was actually a pretty small piece of the pie. We'll see that declining a bit more in the first quarter, but not materially.

The bigger pieces were the lockdowns that were reinstituted in Europe effective -- they -- almost all of our physical locations, these are the locations that we picked up, [Indecipherable] acquisition ever several years ago, we operated over 100 locations today, most of which are in Europe, many of which were basically shut down with next to nothing going on. And those are higher-margin pieces of our business, right, because they're -- because of the physical nature, not just to back-to-sale or actually on the ground, providing the servicing fuel. To that, that was probably 40%, 50% of decline sequentially. And then there is a significant amount of inventory volatility, most specifically in November. And we had a much weaker result on the inventory side of our business sequentially. We be getting a little bit of that back, some of that is timing. We got a little bit back in the first quarter, but not a whole lot. And that was the second biggest piece.

And again, government is just the therapies. As we look to the first quarter, the reason I guided flattish is because we only have a partial quarter of shutdowns in the fourth quarter, we're expecting in many of the European countries, it's probably going to be just about the full quarter. But offsetting that, we don't anticipate the inventory piece of the puzzle. And we're seeing a little bit of growth in other markets. Cargo was actually really strong. Business aviation is coming back. So we believe that will offset any incremental negative impacts of -- in the European physical network of the locations that we operating on airport. And then if you look beyond the first quarter, we're hoping to start seeing some improvement, will Q2, Q3, Q4.

Ben Nolan -- Stifel -- Analyst

Okay. I appreciate the granularity there, Ira. that's helpful. I want to shift a little bit to capital allocation, if I could. You guys are on track to be at $700 million of cash pretty quickly here. The debt is not really falling. I assume you're sort of with revolver or fully paid, you're sort of against some limits there. It looks like you did a little bit, $12 million, $13 million of share repurchases in the quarter. But yes, I -- as we sure -- and maybe to Ken's point earlier, if oil prices are going higher and especially if volumes increase, and there's going to be need for some of that for working capital. But is there any thing you're thinking about maybe really ramping up the buyback program? Or is it going to -- are you thinking a little bit more just sort of gradual in nature?

Ira M. Birns -- Executive Vice President and Chief Financial Officer

You probably can answer that question. Good question. We always look at all the pieces. As I mentioned in my prepared remarks, we have organic growth initiatives, especially as parts of the market come back. Against the question earlier, we always want to have liquidity available for working capital, again, in the event that if you take a look at cargo receivable there, we're down from $3 million to $1.2 billion. Obviously, the accounts payable are way down as well. But eventually, we'll be investing something is in working capital. So that's always critical. And then there's everyday, right? There's a lot of opportunities some maybe better after the circumstance to 2020 than maybe before.

Most specifically in our land business, either the commercial/industrial side of the business, where our team continues to do a good job identifying opportunities for the connect side of our business, is one that I believe has maybe the greatest growth potential of any of our businesses with lots of opportunities out there on the power, gas and sustainability side of effects. So those -- I would say, those come first. But depending upon the level of activity on the amount of capital we need to working capital, it's always the dividend, obviously, and we always seem to find a certain amount of dollars to repurchase shares. Whether that will become a materially greater number, I would probably argue unlikely. But you never know. It really depends on our overall liquidity, our cash flows and when we get out of the table in terms of opportunities to invest. So we always try to do as much as we can within reason. But [Indecipherable] goes overboard from a share repurchase perspective. That's [Indecipherable]

Ben Nolan -- Stifel -- Analyst

Okay. No, that's helpful. And then lastly for me. Ira, I think you'd mentioned in -- when you were talking about the marine business that in the first quarter, you've seen an uptick in hedging activity for your customers. That's the first time I've heard about that in a number of quarters. Any color on sort of what's happening there? Is it just sort of opportunistic? Or does it feel like there's some sustainability to that perhaps?

Ira M. Birns -- Executive Vice President and Chief Financial Officer

Yes. I don't know about sustainability. Obviously, prices have moved pretty significantly a very short period of time to a level we haven't seen in a while. So that -- it doesn't take a lot of that to kind of trigger some sell-in a marine procurement for is bring to say they want to lock in press, right? And so we're seeing a little bit more on that. And that accelerates further, really depends on people's view on pricing going forward, continue to increase, is it going to level off? Or drop?You're right. You haven't heard that for a long time because it's kind of been somewhat done. So there are some signs of life there, they're small. And really, any further growth in that regard we spend on what they happen from a pricing perspective or pricing expectations, which reasonably is important because that's what really describing as something like that going forward.

Michael J. Kasbar -- Chairman and Chief Executive Officer

It's been a sluggish market. The point of supply as what a lot of demand is off. So we'll perhaps see some changes there. If you really do see some volatility that relates to be seen. So a lot of it is cross management, risk management. We trended during the downturn and in terms of looking at other activities, we're evaluating other participation models within that space.. A lot of it is really the core activity of some of our physical locations and produce coming back in some of the other markets coming back, and just on this economic activity. Okay. Well, I guess that's it. So listen, thanks once again to our goal of team, especially and all of your families. It's been quite a year. So in the course of shareholders and move toward action. So hopefully, that will occur. So stay well, stay, stay care, and we'll certainly talk to you next quarter. Bye-bye for now.

Operator

[Operator Closing Remarks]

Duration: 46 minutes

Call participants:

Glenn Klevitz -- Vice President, Assistant Treasurer

Ira M. Birns -- Executive Vice President and Chief Financial Officer

Michael J. Kasbar -- Chairman and Chief Executive Officer

Ken Hoexter -- Bank of America -- Analyst

Ben Nolan -- Stifel -- Analyst

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