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First Quarter and Year-to-Date Highlights
-- Increased sales volumes by 23.6% to 1,310,037 metric tons in Q1 2009,
compared to 1,060,134 metric tons for Q1 2008.
-- Expanded net revenues to $40.0 million.
-- Recorded operating income of $8.3 million.
-- Reported net income of $4.4 million, or $0.10 basic and diluted earnings
per share.
-- Continued expanding global presence and infrastructure:
-- Expanded Greek operations to the market of Patras.
-- Acquired or took delivery of five double-hull bunkering tankers,
including two newbuildings.
-- Secured a new senior secured revolving credit facility for a period of
two years.
-- Entered into strategic alliance with Gulf Oil for the marketing and
distribution of marine lubricants.
The Company recorded net income of $4.4 million, or $0.10 basic and diluted earnings per share, for the three months ended March 31, 2009. For purposes of comparison, the Company reported net income of $7.5 million, or $0.18 basic and diluted earnings per share, for the three months ended March 31, 2008. The weighted average basic and diluted shares outstanding for the three months ended March 31, 2009 were 42,553,550 and 42,553,550, respectively. The weighted average basic and diluted shares outstanding for the three months ended March 31, 2008 were 42,471,325 and 42,622,326, respectively.
Total revenues for the three months ended March 31, 2009, decreased by 31.3% to $365.4 million compared to $532.0 million for the same period in 2008. For the three months ended March 31, 2009, sales of marine petroleum products decreased by 31.9% to $361.0 million compared to $530.4 million for the year-earlier period. Net revenue, which equals total revenue less cost of goods sold and cargo transportation expenses, increased 20.1% to $40.0 million in the first quarter of 2009 compared to $33.3 million in the year-earlier period.
Results for the first quarter of 2009 were primarily driven by a 12.7% increase in the gross spread on marine petroleum products to $35.6 million compared to $31.6 million for the same period in 2008. For the three months ended March 31, 2009, the volume of marine fuel sold increased by 23.6% to 1,310,037 metric tons compared to 1,060,134 metric tons in the year-earlier period, as sales volumes improved in Greece and Singapore. Furthermore, results for the first quarter of 2009 included sales volumes from Aegean's new markets in the U.K. (April 2008) and North America (July 2008). During the three months ended March 31, 2009, the gross spread per metric ton of marine fuel sold decreased to $26.8 per metric ton, compared to $29.7 per metric ton in the year-earlier period.
Operating income for the first quarter of 2009 was $8.3 million compared to $8.5 million for the same period in 2008. Operating expenses, excluding the cost of fuel and cargo transportation costs (both of which are included in the calculation of gross spread on marine petroleum products explained above), increased to $31.7 million for the three months ended March 31, 2009 compared to $24.8 million for the same period in 2008. This increase was principally due to operating an expanded logistics infrastructure during the first quarter of 2009 compared to the first quarter of 2008.
E. Nikolas Tavlarios, President, commented, "During the first quarter, sales volumes were affected by our previously announced focus on actively managing counterparty risk. Sales volumes were also affected by the redeployment of bunkering tankers and inclement weather conditions in certain ports. Management's precautionary and proactive measures have served to protect Aegean during the most challenging economic environment since the Great Depression and enabled the Company to successfully avoid any customer defaults. Aegean's strong financial position, brand name, newbuild program, and proven business model for the physical supply of marine fuel remain as the fundamentals for our future growth. "
Mr. Tavlarios added, "During the quarter, we continued to take advantage of our strong capital position and expanded our global marine fuel platform. Specifically, we strengthened our presence in the Mediterranean by commencing operations in Patras, the second largest port in Greece. We also remain on track to launch operations in Tangiers, Morocco and Trinidad and Tobago during the current second quarter, increasing Aegean's reach to 14 markets worldwide. Complementing this notable growth, we took delivery of two double-hull bunkering tanker newbuildings and acquired three additional double-hull bunkering tankers during the first quarter and year-to-date. By entering new strategic markets and expanding our modern bunkering delivery fleet as we have consistently done in the past, we expect to increase our long-term earnings potential and strengthen Aegean's industry leadership."
Liquidity and Capital Resources
As of March 31, 2009, the Company had cash and cash equivalents of $25.5 million and working capital of $139.3 million. Non-cash working capital, or working capital excluding cash and debt, was $126.3 million as of March 31, 2009.
Net cash used in operating activities was $16.3 million for the three months ended March 31, 2009. Net income, as adjusted for non-cash items, was $10.1 million for the period.
Net cash used in investing activities was $33.9 million for the three months ended March 31, 2009, mainly due to additional payments of $34.6 million under the Company's construction contracts with the shipyards.
Net cash provided by financing activities was $28.8 million for the three months ended March 31, 2009, primarily driven by an increase in long-term debt financing relating to newbuild vessels.
As of March 31, 2009, the Company had approximately $162.3 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 March 31, 2009, the Company had funds of approximately $96.0 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 first quarter of 2009 were led by improved sales volumes in Singapore and Greece. While we believe markets have begun to stabilize, we will maintain a conservative approach in the extension of credit during this period of economic uncertainty. Based on management's prudent decision to tighten credit controls, we have not experienced any customer delinquencies."
Mr. Gianniotis concluded, "Aegean's strong working capital base positions the Company well to further expand its global marine fuel platform and increase future sales volumes. We have significantly funded the equity portion of our 19 remaining double-hull bunkering tanker newbuildings, which are scheduled to be delivered by the end of 2010, and have ample liquidity under our senior secured credit facilities to meet our debt requirements. As we continue to increase our delivery capacity, we will maintain our disciplined approach in pursuing additional consolidation opportunities that drive long-term shareholder value."
Summary Consolidated Financial and Other Data (Unaudited)
For the Three Months
Ended March 31,
2008 2009
(in thousands of U.S.
dollars, unless
otherwise stated)
Income Statement Data:
Sales of marine petroleum products $530,372 $360,958
Voyage and other revenues 1,657 4,464
Total revenues 532,029 365,422
Cost of marine petroleum products sold 496,129 324,380
Salaries, wages and related costs 8,422 10,477
Depreciation and amortization 3,687 4,873
All other operating expenses 15,305 17,389
Operating income 8,486 8,303
Net financing cost 2,233 1,850
FX losses (gains), net (1,251) 1,761
Income Taxes 3 295
Net income $7,501 $4,397
Basic and diluted earnings per share
(U.S. dollars) $0.18 $0.10
Diluted earnings per share (U.S. dollars) $0.18 $0.10
Other Financial Data:
Gross spread on marine petroleum
products(1) $31,626 $35,554
Gross spread on lubricants(1) 193 499
Gross spread on marine fuel(1) 31,433 35,055
Gross spread per metric ton of marine
fuel sold (U.S. dollars) (1) 29.7 26.8
Net cash provided by (used in)
operating activities 40,280 (16,311)
Net cash used in investing activities 11,951 33,944
Net cash provided by (used in)
financing activities $(19,662) $28,835
Sales Volume Data (Metric Tons): (2)
Greece 85,681 156,764
Gibraltar 228,343 213,363
UAE 260,886 233,905
Jamaica 149,101 105,112
Singapore 233,651 353,334
Northern Europe 72,033 56,705
West Africa 26,610 37,662
UK (Portland) - 44,716
Vancouver - 73,443
Other sales volumes(3) 3,829 35,033
Total sales volumes 1,060,134 1,310,037
Other Operating Data:
Bunkering fleet, end of period number(4) 20.0 31.0
Bunkering fleet, average number for
the period(4)(5) 18.5 30.7
RoRo Vessels, end of period number 0.0 1.0
Special Purpose Vessels, end of
period number(6) 0.0 1.0
Number of owned storage facilities,
end of period(7) 3.0 4.0
Summary Consolidated Financial and Other Data (Unaudited)
As of As of
December 31, 2008 March 31, 2009
(in thousands of U.S. dollars,
unless otherwise stated)
Balance Sheet Data:
Cash and cash equivalents 46,927 25,507
Gross trade receivables 132,589 128,255
Allowance for doubtful accounts (1,323) (1,011)
Inventories 55,330 77,186
Current assets 251,387 250,317
Total assets 641,907 671,822
Trade payables 90,279 84,899
Current liabilities (including current
portion of long-term debt) 202,022 110,999
Total debt 253,621 283,282
Total liabilities 356,904 382,463
Total stockholder's equity 285,003 289,359
Working Capital Data:
Working capital(8) 49,365 139,318
Working capital excluding cash and debt(8) 100,158 126,318
1. Gross spread on marine petroleum products represents the margin the
Company generates on sales of marine fuel and lubricants. Gross spread
on marine fuel represents the margin that the Company generates on
sales of various classifications of marine fuel oil ("MFO") or marine
gas oil ("MGO"). Gross spread on lubricants represents the margin that
the Company generates on sales of lubricants. The Company calculates
the above-mentioned gross spreads by subtracting from the sales of the
respective marine petroleum product the cost of the respective marine
petroleum product sold and cargo transportation costs. For arrangements
in which the Company physically supplies the respective marine
petroleum product using its bunkering tankers, costs of the respective
marine petroleum products sold represents amounts paid by the Company
for the respective marine petroleum product sold in the relevant
reporting period. For arrangements in which the respective marine
petroleum product is purchased from the Company's related company,
Aegean Oil S.A., or Aegean Oil, cost of the respective marine petroleum
products sold represents the total amount paid by the Company to the
physical supplier for the respective marine petroleum product and its
delivery to the customer. For arrangements in which the Company
purchases cargos of marine fuel for its floating storage facilities,
transportation costs may be included in the purchase price of marine
fuels from the supplier or may be incurred separately from a
transportation provider.
Gross spread per metric ton of marine fuel sold represents the margin
the Company generates per metric ton of marine fuel sold. The Company
calculates gross spread per metric ton of marine fuel sold by dividing
the gross spread on marine fuel by the sales volume of marine fuel.
Marine fuel sales do not include sales of lubricants. The following
table reflects the calculation of gross spread per metric ton of marine
fuel sold for the periods presented:
Summary Consolidated Financial and Other Data (Unaudited)
For the Three Months
Ended March 31,
2008 2009
(in thousands of U.S. dollars,
unless otherwise stated)
Sales of marine petroleum products 530,372 360,958
Less: Cost of marine petroleum
products sold (496,129) (324,380)
Less: Cargo transportation costs (2,617) (1,024)
Gross spread on marine petroleum products 31,626 35,554
Less: Gross spread on lubricants (193) (499)
Gross spread on marine fuel 31,433 35,055
Sales volume of marine fuel (metric tons) 1,060,134 1,310,037
Gross spread per metric ton of marine
fuel sold (U.S. dollars) 29.7 26.8
The amount that the Company has to pay for marine petroleum products to
fulfill a customer order has been the primary variable in determining
the prices quoted to customers. Therefore, the Company evaluates gross
spread per metric ton of marine fuel sold in pricing individual
transactions and in long-term strategic pricing decisions. The Company
actively monitors its pricing and sourcing strategies in order to
optimize its gross spread on marine petroleum products. The Company
believes that this measure is important to investors because it is an
effective intermediate performance measure of the strength of the
Company's operations.
Gross spread on marine petroleum products, including gross spread on
marine fuel and gross spread on lubricants, and gross spread per metric
ton of marine fuel sold should not be considered as alternatives to
operating income, net income or other GAAP measures and may not be
comparable to similarly titled measures of other companies. These
measures do not reflect certain direct or indirect costs of delivering
marine petroleum products to the Company's customers (such as crew
salaries, vessel depreciation, storage costs, other vessel operating
expenses or overhead costs) or other costs of doing business.
For all periods presented, the Company purchased marine petroleum
products in Greece from its related company, Aegean Oil, which is a
physical supplier in Greece. The cost of these marine petroleum
products was contractually calculated based on Aegean Oil's actual cost
of these products plus a margin.
2. Sales volume data details the volume of marine fuel sold per
market/segment. 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, Portland (U.K.), and Greece, where the Company
conducts operations through its related company, Aegean Oil. Aegean
expects to commence operations in Trinidad and Tobago (Southern
Caribbean) and Tangiers (Morocco) in Q2 2009.
Sales volumes of marine fuel attributed to each market are based on the
point-of-delivery geographical location of the customer vessels.
3. "Other sales volumes" represent sales volumes of marine fuel in which
the Company acts as a broker or trader and does not physically supply
the product to end-user.
4. Bunkering fleet comprises both bunkering vessels and barges.
5. 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.
6. Special Purpose Vessels consists of the Orion, a 550 dwt tanker which
is based in our U.K. market.
7. The Company operates its two Panamax tankers, the Ouranos and the Fos,
as floating storage facilities in the United Arab Emirates and Ghana,
respectively, and its Aframax tanker, the Leader, as a floating storage
facility in Gibraltar.
The ownership of floating 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 floating 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.
8. 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.
First Quarter 2009 Dividend Announcement
On May 13, 2009, the Company's Board of Directors declared a first quarter 2009 dividend of $0.01 per share payable on June 4, 2009, to shareholders of record as of May 21, 2009. 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 at 8:30 a.m. ET on Thursday, May 14, 2009, to discuss its first 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 (877) 879-6184 (for U.S.-based callers) or (719) 325-4805 (for international callers) and enter the passcode: 7461928.
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 Thursday, May 28, 2009, by dialing 888-203-1112 (for U.S.-based callers) or 719-457-0820 (for international callers) and enter the passcode: 7461928.
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 14 markets, including Vancouver, Montreal, Mexico, Jamaica, West Africa, Gibraltar, U.K., Northern Europe, Piraeus, Patras, the United Arab Emirates as well as Singapore, and plans to commence operations in Tangiers, Morocco and Trinidad and Tobago.
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.
http://www.ampni.com
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