Aegean Marine Petroleum Network Inc. Announces Second Quarter 2010 Financial Results

PIRAEUS, Greece, Aug. 11 /PRNewswire-FirstCall/ -- Aegean Marine Petroleum Network Inc. (NYSE: ANW) today announced financial and operating results for the second quarter ended June 30, 2010.

Second Quarter and Year-to-Date Highlights

• Increased sales volumes by 88.5% to 2,825,046 metric tons in Q2 2010, compared to 1,498,937 metric tons for Q2 2009.  
• Expanded net revenues to $68.3 million.
• Reported EBITDA (as defined in Note 1) of $27.5 million in Q2 2010, EBITDA as adjusted for one-time expenses was $29.7 million.
• Reported operating income of $19.2 million.
• Reported net income of $12.0 million, or $0.25 basic and diluted earnings per share; net income adjusted for one-time expenses was $14.2 million, or $0.30 basic and diluted earnings per share.
  • Net income before income tax related to the income contributed by Verbeke Bunkering N.V. was $16.4 million or $0.35 basic and diluted earnings per share.
• Continued expanding global presence and logistics infrastructure:
  • Completed acquisition of Verbeke Bunkering N.V., solidifying Aegean Marine's presence in the ARA region.
  • Acquired the Shell Las Palmas terminal in the Canary Islands, increasing the Company's global network to 16 markets covering more than 40 ports.  
  • Took delivery of three double-hull bunkering tanker newbuildings during Q2 2010 and one to date in Q3 2010.
• Secured new credit facilities and expanded existing facilities in aggregate of $185 million, increasing total access to more than $700 million in working capital credit facilities.

The Company reported net income for the three months ended June 30, 2010 of $12.0 million, or $0.25 basic and diluted earnings per share. Net income adjusted for a $1.5 million loss from sale of a vessel and other non-recurring expenses was $14.2 or $0.30 basic and diluted earnings per share.  For purposes of comparison, for the three months ended June 30, 2009 the Company reported adjusted net income of $12.1 million excluding a one-time gain of $4.2 million, or $0.29 basic and $0.28 diluted earnings per share. The weighted average basic and diluted shares outstanding for the three months ended June 30, 2010 were 47,009,059 and 47,365,777, respectively following the company's repurchase of 1 million shares in May 2010. The weighted average basic and diluted shares outstanding for the three months ended June 30, 2009 were 42,576,830 and 42,728,588 respectively.

Total revenues for the three months ended June 30, 2010, increased by 146.3% to $1,336.6 million compared to $542.6 million for the same period in 2009. For the three months ended June 30, 2010, sales of marine petroleum products increased by 147.5% to $1,331.8 million compared to $538.2 million for the year-earlier period. Net revenue, which equals total revenue less cost of goods sold and cargo transportation expenses, increased by 44.7% to $68.3 million in the second quarter of 2010 compared to $47.2 million in the year-earlier period.

For the three months ended June 30, 2010, the volume of marine fuel sold increased by 88.5% to 2,825,046 metric tons compared to 1,498,937 metric tons in the year-earlier period, as sales volumes increased across major markets. Furthermore, results for the second quarter of 2010 included sales volumes from Aegean Marine's acquisition of Verbeke Bunkering N.V., which closed on April 1, 2010.

Operating income for the second quarter of 2010 was $19.2 million compared to $17.6 million including a non-recurring gain of $4.2 million on the sale of vessels for the same period in 2009. Operating expenses, excluding the cost of fuel and cargo transportation costs, increased to $49.1 million for the three months ended June 30, 2010 compared to $33.8 million for the same period in 2009.

E. Nikolas Tavlarios, President commented, "During the second quarter, Aegean Marine continued to expand its global market share for the physical supply of marine fuel, enabling the Company to increase both sales volumes and EBITDA by 88.5% and 12.7%, respectively, compared to the year-earlier period. Consistent with management's strategy to expand its brand and scale, we completed the acquisition of Verbeke Bunkering at the onset of the second quarter, cementing our presence in the world's second largest bunkering market. Building upon our success, we acquired the Shell Las Palmas terminal in the Canary Islands, which lie along major trans-Atlantic seaborne trade routes. Importantly, the terminal includes dedicated land storage facilities that broaden our new onshore storage facilities under development in, Jamaica, Morocco and the UAE where we expect to commence construction of a facility with approximate capacity of 3 million barrels in September 2010. Including our latest acquisition, which closed in July 2010, Aegean Marine has more than tripled its vast global network to 16 markets covering over 40 ports compared to 5 at the time of our IPO in December 2006."

Mr. Tavlarios continued, "In addition to penetrating new markets and increasing our in-land storage capacity, we further enhanced our high-quality logistics infrastructure with the delivery of three double-hull bunkering tanker newbuildings in the second quarter and one to date in the current third quarter. Going forward, we expect to complete our fully financed newbuild program with the delivery of nine remaining double-hull bunkering tanker newbuildings over the next six months. By expanding our fully integrated marine fuel platform from procurement to delivery, combined with our burgeoning marine lubricant business, we remain well positioned to strengthen our global brand recognition and increase the Company's earnings power."

For the six months ended June 30, 2010, the Company recorded net income of $26.1 million, or $0.56 basic and diluted earnings per share, compared to net income of $20.7 million, or $0.49 basic and diluted earnings per share, for the year-earlier period. The weighted average basic and diluted shares outstanding for the six month period ended June 30, 2010 were 46,401,403 and 46,595,609, respectively. The weighted average basic and diluted shares outstanding for the six months ended June 30, 2009 were 42,565,254 and 42,565,254, respectively.

For the six months ended June 30, 2010, the volume of marine fuel sold increased 61.8% to 4,545,559 metric tons compared to 2,808,974 metric tons in the year-earlier period.

Operating income for the six months ended June 30, 2010 was $36.6 million compared to $25.9 million for the same period in 2009.

Liquidity and Capital Resources

As of June 30, 2010, the Company had cash and cash equivalents of $52.1 million and working capital of $116.4 million. Non-cash working capital, or working capital excluding cash and debt, was $379.7 million as of June 30, 2010.  

Net cash used in operating activities was $22.1 million for the three months ended June 30, 2010.  Net income, as adjusted for non-cash items, was $25.8 million for the period.  

Net cash used in investing activities was $79.9 million for the three months ended June 30, 2010, mainly due to the acquisition of Verbeke Bunkering business and advances paid for both vessels under construction and acquisition of vessels.

Net cash provided by financing activities was $15.3 million for the three months ended June 30, 2010, primarily driven by the proceeds from long-term debt.

As of June 30, 2010, the Company had approximately $170.5 million in available liquidity to finance working capital requirements, which includes unrestricted cash and cash equivalents and available undrawn amounts under the Company's short-term working capital facilities.  Furthermore, as of June 30, 2010, the Company had funds of approximately $54.0 million available under its secured term loans to finance the construction of its new double-hull bunkering tankers.

Spyros Gianniotis, Chief Financial Officer, stated, "Our operating results for the second quarter of 2010 were led by sales volumes growth in our core markets as well as notable contributions from our wholly owned subsidiary, Verbeke Bunkering, which we acquired on April 1, 2010. As we successfully integrated the largest acquisition in Aegean Marine's history, we further enhanced the Company's financial position. Specifically, we secured new credit facilities and expanded existing facilities under favorable terms with global lending institutions in aggregate of approximately $185 million, increasing our current total to more than $700 million in working capital credit facilities. Our significant access to capital provides a distinct competitive advantage as we continue to meet the strong demand for Aegean Marine's integrated marine fuel services and execute management's growth strategy."

1.  EBITDA represents net income before interest, taxes, depreciation and amortization. EBITDA does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by the United States generally accepted accounting principles, or U.S. GAAP, and our calculation of EBITDA may not be comparable to that reported by other companies. EBITDA is included herein because it is a basis upon which the Company assesses its operating performance and because the Company believes that it presents useful information to investors regarding a company's ability to service and/or incur indebtedness. The following table reconciles net income to EBITDA for the periods presented:

2.  Sales volume of marine fuel is the volume of sales of various classifications of MFO and MGO for the relevant period and is denominated in metric tons. The Company does not use the sales volume of lubricants as an indicator.

The Company's markets include its physical supply operations in the United Arab Emirates, Gibraltar, Jamaica, Singapore, Northern Europe, Ghana, Vancouver, Montreal, Mexico, Portland (U.K.), Trinidad and Tobago (Southern Caribbean), Tangiers (Morocco), and Greece, where the Company conducts operations through its related company, Aegean Oil.  

3.  Bunkering fleet comprises both bunkering vessels and barges.  

4.  Figure represents average bunkering fleet number for the relevant period, as measured by the sum of the number of days each bunkering tanker or barge was used as part of the fleet during the period divided by the cumulative number of calendar days in the period multiplied by the number of bunkering tankers at the end of the period.   This figure does not take into account non-operating days due to either scheduled or unscheduled maintenance.

5.  Special Purpose Vessels consists of the Orion, a 550 dwt tanker which is based in our Greek market.  

6.  The Company operates two Panamax tankers, the Ouranos and the Fos, and one Aframax tanker, the Leader as floating storage facilities in the United Arab Emirates, Ghana and Gibraltar respectively. Additionally, the Company operates a barge, the Mediterranean, as a floating storage facility in Greece and a small tanker, the Tapuit, as a floating storage facility in Northern Europe.  The Company also has an on-land storage facility in Portland.

The ownership of storage facilities allows the Company to mitigate its risk of supply shortages. Generally, storage costs are included in the price of refined marine fuel quoted by local suppliers. The Company expects that the ownership of storage facilities will allow it to convert the variable costs of this storage fee mark-up per metric ton quoted by suppliers into fixed costs of operating its owned storage facilities, thus enabling the Company to spread larger sales volumes over a fixed cost base and to decrease its refined fuel costs.

7.  Working capital is defined as current assets minus current liabilities. Working capital excluding cash and debt is defined as current assets minus cash and cash equivalents minus restricted cash minus current liabilities plus short-term borrowings plus current portion of long-term debt.

Second Quarter 2010 Dividend Announcement

On August 11, 2010, the Company's Board of Directors declared a second quarter 2010 dividend of $0.01 per share payable on September 9, 2010, to shareholders of record as of August 26, 2010. The dividend amount was determined in accordance with the Company's dividend policy of paying cash dividends on a quarterly basis subject to factors including the requirements of Marshall Islands law, future earnings, capital requirements, financial condition, future prospects and such other factors as are determined by the Company's Board of Directors. The Company anticipates retaining most of its future earnings, if any, for use in operations and business expansion.

Conference Call and Webcast Information

Aegean Marine Petroleum Network Inc. will conduct a conference call and simultaneous Internet webcast on Thursday, August 12, 2010 at 8:30 a.m. Eastern Time, to discuss its second quarter results.  Investors may access the webcast and related slide presentation, by visiting the Company's website at www.ampni.com, and clicking on the webcast link.  The conference call also may be accessed via telephone by dialing (800) 848-4710 (for U.S.-based callers) or (719) 325-2189 (for international callers) and enter the passcode: 2034148.

A replay of the webcast will be available soon after the completion of the call and will be accessible on www.ampni.com.  A telephone replay will be available through August 26, 2010, by dialing 888-203-1112 (for U.S.-based callers) or 719-457-0820 (for international callers) and enter the passcode: 2034148.

About Aegean Marine Petroleum Network Inc.

Aegean Marine Petroleum Network Inc. is an international marine fuel logistics company that markets and physically supplies refined marine fuel and lubricants to ships in port and at sea. The Company procures product from various sources (such as refineries, oil producers, and traders) and resells it to a diverse group of customers across all major commercial shipping sectors and leading cruise lines. Currently, Aegean has a global presence in more than 16 markets, including Vancouver, Montreal, Mexico, Jamaica, Trinidad and Tobago, West Africa, Gibraltar, U.K., Northern Europe, Piraeus, Patras, the United Arab Emirates, Singapore, Morocco, the Antwerp-Rotterdam-Amsterdam (ARA) region, and Las Palmas.

Cautionary Statement Regarding Forward-Looking Statements

Matters discussed in this press release may constitute forward-looking statements.  The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business.  Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.

The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words "believe," "intend," "anticipate," "estimate," "project," "forecast," "plan," "potential," "may," "should," "expect" and similar expressions identify forward-looking statements. The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, our management's examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.

In addition to these important factors, other important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include our ability to manage growth, our ability to maintain our business in light of our proposed business and location expansion, our ability to obtain double hull secondhand bunkering tankers, the outcome of legal, tax or regulatory proceedings to which we may become a party, adverse conditions in the shipping or the marine fuel supply industries, our ability to retain our key suppliers and key customers, material disruptions in the availability or supply of crude oil or refined petroleum products, changes in the market price of petroleum, including the volatility of spot pricing, increased levels of competition, compliance or lack of compliance with various environmental and other applicable laws and regulations, our ability to collect accounts receivable, changes in the political, economic or regulatory conditions in the markets in which we operate, and the world in general, our failure to hedge certain financial risks associated with our business, our ability to maintain our current tax treatments and our failure to comply with restrictions in our credit agreements and other factors.  Please see our filings with the Securities and Exchange Commission for a more complete discussion of these and other risks and uncertainties.

A copy of the Company's interim unaudited consolidated financial statements along with this press release have been filed today with the U.S. Securities and Exchange Commission on Form 6-K and are available on the SEC's website, www.sec.gov.

SOURCE Aegean Marine Petroleum Network Inc.