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Aegean Marine Petroleum Network Inc. Announces Second Quarter 2014 Financial Results

PIRAEUS, Greece, Aug. 13, 2014 /PRNewswire/ -- Aegean Marine Petroleum Network Inc. (NYSE: ANW) ("Aegean" or the "Company") today announced financial and operating results for the second quarter ended June 30th, 2014.

Second Quarter Highlights

  • Sales volumes of 2,659,620 metric tons.
  • Gross profit of $84.5 million.
  • Operating income of $19.3 million.
  • Net income attributable to Aegean shareholders of $9.3 million or $0.20 basic and diluted earnings per share.
  • EBITDA of $26.7 million.

E. Nikolas Tavlarios, President of Aegean Marine Petroleum Network, commented, "Our strong second quarter results extend our recent track record of profitability and growth and demonstrate that we are successfully executing our strategy despite prevailing industry headwinds. We have developed sustainable growth drivers and believe we remain well positioned to continue to consistently deliver strong results." 

Mr. Tavlarios continued, "During 2014, we have successfully integrated our newly acquired East Coast business, sold four non-core vessels and completed the construction of our Fujairah storage facility while continuing to deliver solid results in a challenging market. We are excited about the forthcoming commencement of storage operations in Fujairah in the second half of 2014, and believe we have additional opportunities to expand our market share.  With a sound strategy in place and the proven ability to successfully execute, we are well positioned to further enhance shareholder value."

The Company achieved net income attributable to Aegean shareholders for the three months ended June 30, 2014 of $9.3 million, or $0.20 basic diluted earnings per share.  For the three months ended June 30, 2013, the Company recorded net income attributable to Aegean shareholders of $5.5 million, or $0.12 basic and diluted earnings per share.

Total revenues for the three months ended June 30, 2014, increased by 1.7% to $1,720.2 million compared with $1,691.8 million reported for the same period in 2013. For the three months ended June 30, 2014, sales of marine petroleum products increased by 1.4% to $1,705.2 million compared with $1,680.9 million for the same period in 2013. Gross profit, which equals total revenue less directly attributable cost of revenue increased by 21.6% to $84.5 million in the second quarter of 2014 compared with $69.5 million in the same period in 2013.

For the three months ended June 30, 2014, the volume of marine fuel sold by the Company decreased by 1.2% to 2,659,620 metric tons compared with 2,693,151 metric tons in the same period in 2013.

Operating income for the second quarter of 2014 increased to $19.3 million as compared to $13.2 million, adjusted for the sale of non-core assets for the same period in 2013. Operating expenses increased by $8.4 million, or 14.8%, to $65.2 million for the three months ended June 30, 2014, compared with $56.8 million for the same period in 2013.

Liquidity and Capital Resources

Net cash used in operating activities was $34.3 million for the three months ended June 30, 2014. Net income, as adjusted for non-cash items (as defined in Note 9) was $18.6 million for the period. 

Net cash used in investing activities was $32.6 million for the three months ended June 30, 2014, mainly due to advances for other fixed assets under construction. Net cash provided by financing activities was $59.1 million for the three months ended June 30, 2014, mainly used to finance our purchases.

As of June 30, 2014, the Company had cash and cash equivalents of $106.9 million and working capital of $223.4 million. Non-cash working capital, or working capital excluding cash and debt, was $644.9 million

As of June 30, 2014, the Company had $582.9 million in available liquidity, which includes unrestricted cash and cash equivalents of $106.9 million and available undrawn amounts under the Company's working capital facilities of $476.0 million, to finance working capital requirements.

The basic and diluted weighted average of common shares outstanding for the three months ended June 30, 2014 were 46,289,429. The basic and diluted weighted average of common shares outstanding for the three months ended June 30, 2013 were 45,681,518.

Spyros Gianniotis, Aegean's Chief Financial Officer, stated, "On the operating side, our business model has consistently proved to be resilient even in volatile market conditions and is a driver of our strong financial position, which differentiates Aegean from its competitors. We have been vigilant in streamlining expenses, optimizing our assets and enhancing the company's financial flexibility."

Mr. Gianniotis concluded, "Our business strategy continues to yield distinct competitive advantages that we believe will allow us to further expand our global market share and pursue profitable revenue growth opportunities. Our dedicated team has built a strong foundation for profitable growth, and we expect to continue on our positive trajectory."

 

Summary Consolidated Financial and Other Data (Unaudited)







For the Three Months Ended
June 30,

For the Six Months Ended      

June 30,



2013


2014



2013


2014



(in thousands of U.S. dollars, unless otherwise stated)

Income Statement Data:










Revenues - third parties

$

1,682,076

$

1,711,953


$

3,245,978

$

3,402,137

Revenues - related companies


9,748


8,261



16,337


12,441

Total revenues


1,691,824


1,720,214



3,262,315


3,414,578

Cost of revenues  - third parties


1,583,580


1,534,520



3,000,061


3,059,244

Cost of revenues– related companies


38,762


101,229



122,049


187,958

Total cost of revenues


1,622,342


1,635,749



3,122,110


3,247,202

Gross profit


69,482


84,465



140,205


167,376

Operating expenses:










Selling and distribution


48,622


55,798



99,578


110,766

General and administrative


7,275


8,338



14,240


16,463

Amortization of intangible assets


374


1,033



750


2,055

Loss / (gain) on sale of vessels, net


512


-



3,780


(493)

Vessel Impairment Charge


-


-



-


4,062

Operating income


12,699


19,296



21,857


34,523

Net financing cost


(7,083)


(8,530)



(13,236)


(16,990)

Gain on sale of subsidiary, net


-


-



4,174


-

Foreign exchange (losses) / gain, net


(70)


(152)



329


97

Income taxes income / (expense)


15


(1,269)



(396)


(3,165)

Net income


5,561


9,345



12,728


14,465

Less income attributable to non-controlling interest


21


22



2


46

Net income attributable to AMPNI shareholders

$

5,540

$

9,323


$

12,726

$

14,419

Basic earnings per share (U.S. dollars)

$

0.12

$

0.20


$

$0.27

$

$0.30

Diluted earnings per share (U.S. dollars)

$

0.12

$

0.20


$

$0.27

$

$0.30











EBITDA(1)

$

19,719

$

26,740


$

40,740

$

50,196











Other Financial Data:










Gross spread on marine petroleum products(2)

$

63,262

$

78,066


$

126,446

$

151,334

Gross spread on lubricants(2)


1,096


585



2,155


1,487

Gross spread on marine fuel(2)


62,166


77,481



124,291


149,847

Gross spread per metric ton of marine
fuel sold (U.S. dollars) (2)


23.1


29.1



24.6


27.9

Net cash used in operating activities

$

(66,365)

$

(34,341)


$

(24,184)

$

(66,833)

Net cash used in investing activities


(20,341)


(32,593)



(23,361)


(46,768)

Net cash provided by financing activities


87,524


59,096



33,393


158,151











Sales Volume Data (Metric Tons): (3)










Total sales volumes


2,693,151


2,659,620



5,060,228


5,365,443











Other Operating Data:










Number of owned bunkering tankers, end of period(4)


54.0


51.0



54.0


51.0

Average number of owned bunkering tankers(4)(5)


54.2


51.0



54.8


51.5

Special Purpose Vessels, end of period(6)


1.0


1.0



1.0


1.0

Number of operating storage facilities, end of period(7)


8.0


14.0



8.0


14.0

 

Summary Consolidated Financial and Other Data (Unaudited)







As of

December 31,

2013

As of

June 30,

2014







(in thousands of U.S. dollars,

unless otherwise stated)

Balance Sheet Data:



Cash and cash equivalents


62,575

106,929

Gross trade receivables


472,543

562,515

Allowance for doubtful accounts


(2,622)

(3,094)

Inventories


303,297

265,732

Current assets


896,730

1,002,081

Total assets


1,616,185

1,742,731

Trade payables


241,743

201,615

Current liabilities (including current portion of long-term debt)


652,277

778,728

Total debt


783,317

943,944

Total liabilities


1,072,439

1,183,168

Total stockholder's equity


543,746

559,563





Working Capital Data:




Working capital(8)


244,453

223,353

Working capital excluding cash and debt(8)


541,919

644,937





Notes:

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 United States generally accepted accounting principles, or U.S. GAAP, and our calculation of EBITDA may not be comparable to that recorded 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:

 


For the Three Months Ended June 30,


2013

2014


(in thousands of U.S. dollars,

unless otherwise stated)

Net income attributable to AMPNI shareholders

5,540

9,323




Add: Net financing cost including amortization
  of financing costs

7,083

8,530

  Add/(Less): Income tax expense/(income)

(15)

1,269

  Add: Depreciation and amortization excluding
  amortization of financing costs

7,111

7,618




EBITDA

19,719

26,740

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. Gross spread on marine petroleum products, gross spread of MFO and gross spread on lubricants are not items recognized by U.S. GAAP and should not be considered as an alternative to gross profit or any other indicator of a Company's operating performance required by U.S. GAAP. The Company's definition of gross spread may not be the same as that used by other companies in the same or other industries.  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 custom 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:

 


For the Three Months Ended 
June 30,


2013


2014



Sales of marine petroleum products

1,680,923


1,705,188

Less: Cost of marine petroleum products sold

(1,617,661)


(1,627,122)

Gross spread on marine petroleum products

63,262


78,066

Less: Gross spread on lubricants

(1,096)


(585)

Gross spread on marine fuel

62,166


77,481





Sales volume of marine fuel (metric tons)

2,693,151


2,659,620





Gross spread per metric ton of marine

fuel sold (U.S. dollars)

23.1


29.1

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, Vancouver, Portland (U.K.), Trinidad and Tobago (Southern Caribbean), Tangiers (Morocco), Las Palmas, Tenerife, Panama, Hong Kong, Barcelona, Algeciras, US East Coast  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 owns one Aframax tanker, the Leader as a floating storage facility in the United Arab Emirates, 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 operates on-land storage facilities in Portland, Las Palmas, Tangiers, Panama, U.S.A. and Barcelona.

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.

9. Net income as adjusted for non-cash items, such as depreciation, provision for doubtful accounts, restricted stock, amortization, deferred income taxes, loss on sale of vessels, net, impairment losses, unrealized loss/(gain) on derivatives and unrealized foreign exchange loss/(gain), net, is used to assist in evaluating our  ability to make quarterly cash distributions. Net income as adjusted for non-cash items is not recognized by accounting principles generally accepted in the United States and should not be considered as an alternative to net income or any other indicator of the Company's performance required by accounting principles generally accepted in the United States.

Second Quarter 2014 Dividend Announcement
On August 13, 2014, the Company's Board of Directors declared a second quarter 2014 dividend of $0.01 per share payable on September 10, 2014 to shareholders of record as of August 27, 2014. 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 14, 2014 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 (888) 389-5988 (for U.S.-based callers) or (719) 325-2429 (for international callers) and enter the passcode: 7807271. 

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 28, 2014 by dialing (888) 203-1112 or (for U.S.-based callers) or (719) 457-0820 (for international callers) and enter the passcode: 7807271.

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 27 markets, including Vancouver, Montreal, Mexico, Jamaica, Trinidad and Tobago, Gibraltar, U.K., Northern Europe, Piraeus, Patras, the United Arab Emirates, Singapore, Morocco, the Antwerp-Rotterdam-Amsterdam (ARA) region, Las Palmas, Tenerife, Panama, Hong Kong, Barcelona, US East Coast and Algeciras. The Company has also entered into a strategic alliance to extend its global reach to China. To learn more about Aegean, visit http://www.ampni.com.

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.

SOURCE Aegean Marine Petroleum Network Inc.

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