Aegean Marine Petroleum Network Inc. Has Announced First Quarter 2017 Financial Results

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Aegean Marine PetroleumNEW YORK, May 24, 2017  — Aegean Marine Petroleum Network Inc. (NYSE: ANW) (“Aegean” or the “Company”) today announced financial and operating results for the first quarter ended March 31, 2017.

First Quarter Financial Highlights

  • Recorded sales volumes of 4,450,263 metric tons.
  • Achieved gross profit of $80.3 million.
  • Generated operating income of $13.9 million.
  • Recorded net income attributable to Aegean shareholders of $1.4 million or $0.03 basic and diluted earnings per share.
  • Generated EBITDA of $21.9 million.

First Quarter Operational Highlights

E. Nikolas Tavlarios, Aegean’s President, commented, “Our results in the quarter were impacted by increased competition across operations and continued challenging market dynamics. These results do not reflect the overall strength of our business or our strong track record of delivering consistent growth and stable financial results. To position Aegean for continued success, we are actively managing our business and taking decisive action to improve performance despite industry headwinds.  We are controlling what we can control by shifting our strategy towards a more\ asset-light model and taking a strategic view of our operations to enhance efficiency. Consistent with our focus of actively managing our fleet, we are marketing several vessels for sale, charter, or redeployment to the highest growth areas. We are confident that these initiatives, once fully implemented, will drive improved performance and value creation.”

Financial Results

  • Revenue – The Company reported total revenue of $1.5 billion for the first quarter of 2017, an increase of 102.5% compared to the same period in 2016, primarily due to the increase in oil prices. Voyage and other revenues were, $20.0 million, approximately $1.9 million more than the same period in 2016.
  • Gross Profit – Gross Profit, which equals total revenue less directly attributable cost of revenue decreased by 0.7% to $80.3 million in the first quarter of 2017 compared to $80.9 million in the same period in 2016.
  • Operating Expense – The Company reported operating expense of $66.5 million for the first quarter of 2017, an increase of $3.9 million or 6.2% compared to the same period in prior year due mainly to higher marine fuel costs for our fleet and additional offices.   
  • Operating Income – Operating income for the first quarter of 2017 was $13.9 million, a decrease of 4.4 million or 24.0% compared to the same period in prior year.
  • Net Income –   Net income attributable to Aegean shareholders for the three months ended March 31, 2017 was $1.4 million, or $0.03 per basic and diluted share, a decrease of $10.4 million or 88.1% compared to the same period in 2016 due mainly to higher operating expenses and finance costs.

Operational Metrics 

  • Sales Volume – For the three months ended March 31, 2017, the Company reported marine fuel sales volumes of 4,450,263 metric tons, an increase of 5.6% compared to the same period in 2016.
  • EBITDA Per Metric Ton of Marine Fuel Sold – For the three months ended March 31, 2017, the Company reported EBITDA per metric ton of marine fuel sold of $4.93. EBITDA per metric ton of marine fuel sold in the prior year period was $6.44 per metric ton.
  • Gross Spread Per Metric Ton of Marine Fuel Sold – For the three months ended March 31, 2017, the Company reported gross spread per metric ton of marine fuel sold on an aggregate basis of $16.3. Gross spread per metric ton of marine fuel sold in the prior year period was $17.6.

Liquidity and Capital Resources

  • Net cash used in operating activities was $67.1 million for the three months ended March 31, 2017 due mainly to higher sales volumes in the U.S. and Northern Europe.
  • Net income as adjusted for non-cash items (as defined in Note 9 below) was $3.9 million for the same period.
  • Net cash used in investing activities was $2.8 million for the three months ended March 31, 2017, primarily due to advances for fixed assets under construction.
  • Net cash provided by financing activities was $36.4 million for the three months ended March 31, 2017, primarily due to higher sales volumes.
  • As of March 31, 2017, the Company had cash and cash equivalents of $60.4 million and working capital of $432.4 million. Non-cash working capital, or working capital excluding cash and debt, was $708.2 million.
  • As of March 31, 2017, the Company had $836.5 million undrawn amounts under its working capital facilities and $60.4 million of unrestricted cash and cash equivalents to finance working capital requirements.
  • The weighted average basic and diluted shares outstanding for the three months ended March 31, 2017 was 37,735,380. The weighted average basic and diluted shares outstanding for the three months ended March 31, 2016 was 47,545,710.

Spyros Gianniotis, Aegean’s Chief Financial Officer, stated, “During the quarter, we maintained our financial flexibility and balance sheet strength, as we have done throughout various market conditions. To further enhance profitability, we are actively evaluating our markets to redeploy assets and capital to opportunities we believe will generate the best return and accelerate our initiatives to rationalize expenses. “

 

 

Summary Consolidated Financial and Other Data (Unaudited)

 
   

For the Three Months Ended March 31,

 
   

2016

 

2017

 
   

(in thousands of U.S.dollars, unless

otherwise stated)

 

Income Statement Data:

         

Revenues – third parties

$

748,516

$

1,519,025

 

Revenues – related companies

 

4,416

 

5,233

 

Total revenues

 

752,932

 

1,524,258

 

Cost of revenues  – third parties

 

661,626

 

1,424,280

 

Cost of revenues– related companies

 

10,438

 

19,645

 

Total cost of revenues

 

672,064

 

1,443,925

 

Gross profit

 

80,868

 

80,333

 

Operating expenses:

         

Selling and distribution

 

50,772

 

54,885

 

General and administrative

 

11,496

 

11,415

 

Amortization of intangible assets

 

300

 

167

 

Operating income

 

18,300

 

13,866

 

Net financing cost

 

(9,361)

 

(12,073)

 

Foreign exchange gains, net

 

239

 

307

 

Income taxes benefit / (expense)

 

2,592

 

(729)

 

Net income

 

11,770

 

1,371

 

Less income attributable to non-controlling interest

 

 

17

 

Net income attributable to AMPNI shareholders

$

11,770

$

1,354

 

Basic earnings per share (U.S. dollars)

$

0.24

$

0.03

 

Diluted earnings per share (U.S. dollars)

$

0.24

$

0.03

 
           

EBITDA(1)

$

27,147

$

21,938

 
           

Other Financial Data:

         

Gross spread on marine petroleum products(2)

$

75,068

$

73,151

 

Gross spread on lubricants(2)

 

734

 

626

 

Gross spread on marine fuel(2)

 

74,334

 

72,525

 

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

 

17.6

 

16.3

 

Net cash provided by / (used) in operating activities

$

10,944

$

(67,090)

 

Net cash (used in) / provided by investing activities

 

(8,755)

 

(2,842)

 

Net cash (used in) / provided by financing activities

 

(6,024)

 

36,353

 
           

Sales Volume Data (Metric Tons): (3)

         

Total sales volumes

 

4,212,636

 

4,450,263

 
           

Other Operating Data:

         

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

 

49.0

 

45.0

 

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

 

49.0

 

45.0

 

Special Purpose Vessels, end of period(6)

 

1.0

 

1.0

 

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

 

14.0

 

12.0

 

 

 

Summary Consolidated Financial and Other Data (Unaudited)

 
   

As of

December 31,

2016

As of

March 31,

2017

       
   

(in thousands of U.S. dollars,

unless otherwise stated)

Balance Sheet Data:

   

Cash and cash equivalents

 

93,836

60,391

Gross trade receivables

 

512,398

627,176

Allowance for doubtful accounts

 

(8,647)

(9,411)

Inventories

 

187,766

172,342

Total Current assets

 

909,252

963,282

Total assets

 

1,600,933

1,651,216

Trade payables

 

131,584

141,890

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

 

497,712

530,836

Total debt

 

817,631

853,309

Total liabilities

 

1,011,342

1,055,260

Total stockholder’s equity

 

589,591

595,956

       

Working Capital Data:

     

Working capital(8)

 

411,540

432,446

Working capital excluding cash and debt(8)

 

629,370

708,231

       

 

 

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. Adjusted EBITDA represents net income before interest, taxes, depreciation and amortization, vessel and investment impairments, gains/losses on vessel disposals and other non-recurring exceptional items. EBITDA and Adjusted EBITDA are included herein because they are a basis upon which the Company assesses its operating performance.

Adjusted EBITDA per metric ton of marine fuel sold represents the net income before interest, taxes, depreciation and amortization, vessel and investment impairments, gains/losses on vessel disposals and other non-recurring exceptional items the Company generates per metric ton of marine fuel sold. The Company calculates Adjusted EBITDA per metric ton of marine fuel sold by dividing the EBITDA by the sales volume of marine fuel. Marine fuel sales do not include sales of lubricants.

The following table reconciles net income attributable to AMPNI to EBITDA, Adjusted EBITDA and Adjusted EBITDA per metric ton of marine fuel sold for the periods presented:

 

 

For the Three Months Ended March 31,

 

2016

2017

 

(in thousands of U.S. dollars,

unless otherwise stated)

Net income to AMPNI shareholders

11,770

1,354

     

Add: Net financing cost including amortization of financing costs

9,361

12,073

  Add: Income tax (benefit) / expense

(2,592)

729

  Add: Depreciation and amortization excluding amortization of financing
costs

8,608

7,782

     

EBITDA

27,147

21,938

     

Add: Non-recurring exceptional items

Adjusted EBITDA

27,147

21,938

     

Sales volume of marine fuel (metric tons)

4,212,636

4,450,263

Adjusted EBITDA per metric ton of marine

fuel sold (U.S. dollars)

6.44

4.93

     

 

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 
March 31,

 
 

2016

 

2017

 
 

(in thousands of U.S. dollars,

unless otherwise stated)

 

Sales of marine petroleum products

734,815

 

1,504,241

 

Less: Cost of marine petroleum products sold

(659,747)

 

(1,431,090)

 

Gross spread on marine petroleum products

75,068

 

73,151

 

Less: Gross spread on lubricants

(734)

 

(626)

 

Gross spread on marine fuel

74,334

 

72,525

 
         

Sales volume of marine fuel (metric tons)

4,212,636

 

4,450,263

 
         

Gross spread per metric ton of marine

fuel sold (U.S. dollars)

17.6

 

16.3

 

 

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 include the sales volume of lubricants in the calculation of gross spread per metric ton of marine fuel sold.

   

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 two barges, the Mediterranean and Umnenga, as floating storage facilities in Greece and South Africa. The Company also operates on-land storage facilities in Las Palmas, Fujairah, Tangiers, the U.S.A. and Hamburg.

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, share-based compensation, amortization, deferred income taxes, gain/loss on sale of vessels, 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. The following table reflects the calculation of net income as adjusted for non-cash items for the periods presented:

 

 

For the Three Months Ended

March 31,

 
 

2016

 

2017

 
 

(in thousands of U.S. dollars,

unless otherwise stated)

Net income

11,770

 

1,371

 

Add: Depreciation

6,439

 

5,875

 

Add: Provision for doubtful accounts

781

 

764

 

Add: Share based compensation

2,409

 

1,884

 

Add: Amortization

4,566

 

4,976

 

Add: Net deferred tax (benefit)  / expense

(2,879)

 

3,612

 

Add: Unrealized loss / (gain)  on derivatives

27,628

 

(14,606)

 

Add: Unrealized foreign exchange loss

207

 

70

 

Net income as adjusted for non-cash items

50,921

 

3,946

 

 

 

First Quarter 2017 Dividend Announcement
On May 23, 2017, the Company’s Board of Directors declared a first quarter 2017 dividend of $0.02 per share payable on or about June 20, 2017 to shareholders of record as of June 6, 2017. 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.