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

PIRAEUS, Greece, Nov. 10, 2010 /PRNewswire-FirstCall/ -- Aegean Marine Petroleum Network Inc. (NYSE: ANW) today announced financial and operating results for the third quarter ended September 30, 2010.

Third Quarter 2010 Highlights

• Increased sales volumes by 75.6% to 2,871,711 metric tons in Q3 2010, compared to 1,635,473 metric tons for Q3 2009.  
• Expanded net revenues to $60.5 million.
• Reported EBITDA (as defined in Note 1) of $14.1 million in Q3 2010; EBITDA adjusted for one-time expenses was $17.2 million.
• Reported operating income of $9.8 million.
• Reported net income of $4.6 million, or $0.10 basic and diluted earnings per share; net income adjusted for one-time expenses was $7.7 million, or $0.16 basic and diluted earnings per share.
• Further expanded global marine fuel logistics platform.
  • Completed acquisition of the Shell Las Palmas terminal in the Canary Islands, expanding global network to 16 markets covering more than 40 ports.
  • Took delivery of two double-hull bunkering tanker newbuildings in Q3 2010.

The Company reported net income for the three months ended September 30, 2010 of $4.6 million, or $0.10 basic and diluted earnings per share.  Net income adjusted for one-time expenses, including $1.2 million in restructuring charges for the Company's Vancouver operations as well as $1.9 million in unrealized foreign exchange losses related to Aegean Marine's Verbeke Bunkering subsidiary, was $7.7 million or $0.16 basic and diluted earnings per share. For purposes of comparison, for the three months ended September 30, 2009 the Company reported net income of $14.1 million, or $0.33 basic and diluted earnings per share. The weighted average basic and diluted shares outstanding for the three months ended September 30, 2010 were 46,187,311 and 46,547,367, respectively. The weighted average basic and diluted shares outstanding for the three months ended September 30, 2009 were 42,588,483 and 42,835,526 respectively.

Total revenues for the three months ended September 30, 2010, increased by 82.0% to $1,340.0 million compared to $736.1 million for the same period in 2009. For the three months ended September 30, 2010, sales of marine petroleum products increased by 82.2% to $1,333.4 million compared to $731.8 million for the year-earlier period. Net revenue, which equals total revenue less cost of goods sold and cargo transportation expenses, increased by 15.9% to $60.5 million in the third quarter of 2010 compared to $52.2 million in the year-earlier period.

For the three months ended September 30, 2010, the volume of marine fuel sold increased by 75.6% to 2,871,711 metric tons compared to 1,635,473 metric tons in the year-earlier period, as sales volumes increased across major markets.

Operating income for the third quarter of 2010 was $9.8 million compared to $17.2 for the same period in 2009. Operating expenses, excluding the cost of fuel and cargo transportation costs, increased to $50.7 million for the three months ended September 30, 2010 compared to $35.0 million for the same period in 2009.

E. Nikolas Tavlarios, President commented, "During the third quarter, Aegean Marine increased sales volumes by more than 75% compared to the year-earlier period. However our results for the quarter reflect a change in the competitive landscape across our geographical portfolio, particularly in our two largest markets, which adversely affected gross spread. The industry experienced an increase in the supply of marine fuel together with a change in buying patterns by shipowners, who used increased downtime to fill their marine fuel requirements through smaller purchases in a higher number of ports.  Additionally, our performance for the quarter was impacted by one-time restructuring charges for our Vancouver market as well as unrealized foreign exchange loss related to our Verbeke Bunkering subsidiary."

Mr. Tavlarios added, "With a comprehensive marine fuel solution from procurement to delivery, combined with considerable access to capital, Aegean Marine's future prospects remain strong. Our unique business model creates attractive leverage opportunities and we expect to increase our long-term earning potential as we continue to expand our global full-service platform and meet the strong demand for our vertically integrated services."

For the nine months ended September 30, 2010, the Company recorded net income of $30.7 million, or $0.66 basic and diluted earnings per share, compared to net income of $34.8 million, or $0.82 basic and diluted earnings per share, for the year-earlier period. The weighted average basic and diluted shares outstanding for the nine month period ended September 30, 2010 were 46,329,254 and 46,512,978, respectively. The weighted average basic and diluted shares outstanding for the nine months ended September 30, 2009 were 42,573,082 and 42,601,423, respectively.

Total revenues for the nine months ended September 30, 2010, increased to $3,519.9 million compared to $1,644.1 million for the same period in 2009. For the nine months ended September 30, 2010, sales of marine petroleum products increased to $3,505.0 million compared to $1,631.0 million for the year-earlier period. Net revenue increased 32.0% to $184.0 million for the nine month period ended September 30, 2010, compared to $139.4 million in the year-earlier period.

For the nine months ended September 30, 2010, the volume of marine fuel sold increased 66.9% to 7,417,270 metric tons compared to 4,444,447 metric tons in the year-earlier period.

Operating income for the nine months ended September 30, 2010 was $46.4 million compared to $43.1 million for the same period in 2009.

Liquidity and Capital Resources

As of September 30, 2010, the Company had cash and cash equivalents of $73.3 million and working capital of $116.9 million. Non-cash working capital, or working capital excluding cash and debt, was $372.7 million as of September 30, 2010.  

Net cash provided by operating activities was $14.8 million for the three months ended September 30, 2010.  

Net cash used in investing activities was $13.6 million for the three months ended September 30, 2010, mainly due to the Las Palmas acquisition.

Net cash provided by financing activities was $19.9 million for the three months ended September 30, 2010, mainly due to newbuilding deliveries and increases in short term debt to meet working capital needs.

As of September 30, 2010, the Company had approximately $336.5 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 September 30, 2010, the Company had funds of approximately $16.9 million available under its secured term loans to finance the construction of its new double-hull bunkering tankers.

Spyros Gianniotis, Chief Financial Officer, stated, "Aegean Marine's results for the third quarter of 2010 reflect significant sales volume growth in core markets located in Singapore and the UAE as well as contributions from new markets. With a strong capital structure, including more than $700 million in working capital credit facilities, we remain well positioned to enhance future performance."

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:

Summary Consolidated Financial and Other Data (Unaudited)

2.  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:

3.  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.  

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 Greek market.  

7.  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 on-land storage facilities in Portland and Las Palmas.

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.

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.

Third Quarter 2010 Dividend Announcement

On November 10, 2010, the Company's Board of Directors declared a third quarter 2010 dividend of $0.01 per share payable on December 8, 2010, to shareholders of record as of November 24, 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, November 11, 2010 at 8:30 a.m. Eastern Time, to discuss its third 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) 967-7187 (for U.S.-based callers) or (719) 457-2653 (for international callers) and enter the passcode: 4043924.

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 November 25, 2010, by dialing (888) 203-1112 (for U.S.-based callers) or (719) 457-0820 (for international callers) and enter the passcode: 4043924.

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.