PIRAEUS, Greece, May 14 /PRNewswire-FirstCall/ -- Aegean Marine
Petroleum Network Inc. (NYSE: ANW), an international marine fuel logistics
company that markets and physically supplies refined marine fuel and
lubricants to ships in port and at sea, announced today financial and
operating results for the three months ended March 31, 2008.
First Quarter 2008 and Year-to-Date Highlights
-- Increased sales volumes by 47.6% to 1,060,134 metric tons for Q1 2008,
compared to 718,445 metric tons for Q1 2007
-- Generated gross spread on marine petroleum products of $31.6 million
-- Reported operating income of $8.5 million
-- Recorded net income of $7.5 million, or $0.18 basic and diluted
earnings per share
-- Adjusted net income, which excludes expenses related to Aegean's new
U.K. service center, was $8.0 million, or $0.19 basic and diluted
earnings per share
-- Further enhanced full-service international marine fuel logistics
infrastructure
-- Took delivery of two double-hull bunkering tanker newbuildings
-- Commenced physical supply operations in West Africa and the U.K. on
January 15, 2008 and April 1, 2008, respectively, increasing global
network of service centers to eight
The Company recorded net income of $7.5 million, or $0.18 basic and
diluted earnings per share, for the three months ended March 31, 2008. For
purposes of comparison, the Company reported net income of $6.6 million, or
$0.16 basic and diluted earnings per share, for the three months ended
March 31, 2007. 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. The weighted average basic and diluted shares outstanding for
the three months ended March 31, 2007 were 42,410,000 and 42,432,474,
respectively.
During the three months ended March 31, 2008, the Company incurred
operating expenses totaling $0.5 million related to its service center in
Portland, United Kingdom, which commenced revenue-generating operations on
April 1, 2008. Adjusted net income, excluding these items, was $8.0 million
or $0.19 basic and diluted earnings per share.
Total revenues for the three months ended March 31, 2008 increased by
148.8% to $532.0 million compared to $213.8 million for the same period in
2007. For the three months ended March 31, 2008, sales of marine petroleum
products increased by 150.5% to $530.4 million compared to $211.7 million
for the same period in 2007.
Results for the first quarter of 2008 were driven by a 74.6% increase
in the gross spread on marine petroleum products to $31.6 million compared
to $18.1 million for the same period in 2007. For the three months ended
March 31, 2008, the volume of marine fuel sold increased 47.6% to 1,060,134
metric tons compared to 718,445 metric tons in the same period in 2007, as
sales volumes in the Company's service centers located in the United Arab
Emirates and Singapore improved significantly. Furthermore, results for the
first quarter of 2008 included sales volumes from Aegean's new service
center in Northern Europe following consummation of the Company's
acquisition of Bunkers at Sea NV in October 2007, as well as sales volumes
from Aegean's newly-established service center in West Africa, which
commenced revenue-generating activities on January 15, 2008. During the
three months ended March 31, 2008, the gross spread per metric ton of
marine fuel sold increased to $29.7 per metric ton, compared to $24.8 per
metric ton during the three months ended March 31, 2007.
Operating income for the three months ended March 31, 2008, was $8.5
million compared to $6.0 million for the same period in 2007. 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 $24.8 million for the
three months ended March 31, 2008 compared to $14.2 million for the same
period in 2007. This increase was principally due to a larger fleet of
bunkering tankers and floating storage facilities owned and operated by the
Company during the first quarter of 2008 compared to the first quarter of
2007.
Net income for the first quarter of 2008, which totalled $7.5 million,
was adversely affected by higher interest costs. The Company principally
incurs interest expense on its revolving overdraft facility used to finance
working capital requirements. Furthermore, the Company incurs interest
expense on its long-term debt used to finance the construction of its
bunkering tankers on order. The Company capitalizes interest incurred on
long-term debt during the construction phase of its vessels and recognizes
interest expense in its income statement as soon as a vessel is delivered
from the shipyard.
E. Nikolas Tavlarios, President, commented, "We are pleased by our
strong start to 2008 as we continue to expand our global presence and
logistics infrastructure. Building upon the successful launch of our new
service center in Northern Europe, we commenced operations in West Africa
during the first quarter of 2008. We also initiated sales activities for
our third new service center, located in the U.K., on April 1, 2008.
Complementing this success, we took delivery of two double-hull bunkering
tanker newbuildings during the first quarter and remain on schedule to take
delivery of six additional newly built double-hull bunkering tankers this
year. By significantly expanding our global network for the physical supply
of marine fuel and our delivery capacity, we expect to further capitalize
on the positive industry fundamentals and strengthen our leading position
as a full-service independent supplier of marine fuel."
Liquidity and Capital Resources
As of March 31, 2008, the Company had cash and cash equivalents of
$10.6 million and working capital of $66.4 million. Non-cash working
capital, or working capital excluding cash and debt, was $160.1 million as
of March 31, 2008, down from $190.2 million as of December 31, 2007.
Net cash provided by operating activities was $40.3 million for the
three months ended March 31, 2008. Net income, as adjusted for non-cash
items, was $11.7 million for the period and the net negative change in
working capital accounts added $30.3 million in cash during the period. The
Company made drydocking payments of $1.7 million during the three-month
period ended March 31, 2008. Net cash used in investing activities was
$12.0 million for the three months ended March 31, 2008, mainly due to
additional payments of $22.1 million under the Company's construction
contracts with the shipyards. Furthermore, the reduction in restricted cash
balances resulted in cash inflows to the Company of $10.3 million. Net cash
used in financing activities amounted to $19.7 million for the three months
ended March 31, 2008, mainly due to the use of surplus cash provided by
operating activities to pay down debt outstanding under the Company's
revolving overdraft facility.
As of March 31, 2008, the Company had approximately $60.6 million in
available liquidity to finance working capital requirements, which includes
unrestricted cash and cash equivalents and the available undrawn amount
under the Company's $150.0 million revolving overdraft facility, which is a
part of the Company's $300.0 million senior secured credit facility. Also,
as of March 31, 2008, the Company had a $150 million revolving guarantee
and letter of credit facility under the Company's $300.0 million senior
secured credit facility. Standby letters of credit are critical drivers of
growth in the marine fuel industry as most suppliers of refined marine fuel
transact on a secured basis. Finally, the Company had funds of
approximately $145.7 million available under the Company's secured term
loans to finance the construction of its new double-hull bunkering tankers.
Ziad Nakhleh, Chief Financial Officer, stated, "Our financial results
for the first quarter of 2008 were led by significant sales volume growth
in our Singapore and UAE service centers. We also reported sales volumes
during the first quarter for our new locations in Northern Europe and West
Africa, which commenced operations in the fourth quarter of 2007 and the
first quarter of 2008, respectively. Our notable performance was partially
offset by temporary market disruptions in Gibraltar, financing costs of our
increased working capital requirements and pre-operating costs related to
our new U.K. service center, which had not yet commenced operations. We
believe the considerable growth in our integrated platform for the
worldwide delivery of marine fuel combined with our strong working capital
base bodes well for management to further enhance the Company's earnings
potential as we continue to execute our long-term growth strategy."
Summary Consolidated Financial and Other Data
(Unaudited)
For the Three Months Ended March 31,
2007 2008
(in thousands of U.S. dollars,
unless otherwise stated)
Income Statement Data:
Sales of marine petroleum products $211,677 $530,372
Voyage and other revenues 2,080 1,657
Total revenues 213,757 532,029
Cost of marine petroleum products sold 193,588 496,129
Salaries, wages and related costs 4,509 8,422
Depreciation and amortization 2,234 3,687
All other operating expenses 7,434 15,305
Operating income 5,992 8,486
Net financing income (cost) 582 (2,233)
Other non-operating income 14 1,248
Net income $6,588 $7,501
Basic and diluted earnings per share
(U.S. dollars) $0.16 $0.18
Other Financial Data:
Gross spread on marine petroleum
products (1) $18,089 $31,626
Gross spread on lubricants (1) 306 193
Gross spread on marine fuel (1) 17,783 31,433
Gross spread per metric ton of marine
fuel sold (U.S. dollars) (1) 24.8 29.7
Net cash provided by (used in) operating
activities (3,561) 40,280
Net cash used in investing activities 18,424 11,951
Net cash provided by (used in) financing
activities $2,640 $(19,662)
Sales Volume Data (Metric Tons): (2)
Greece service center 96,470 85,681
Gibraltar service center 274,991 228,343
UAE service center 133,511 260,886
Jamaica service center 155,857 149,101
Singapore service center 53,266 233,651
Northern Europe service center - 72,033
Ghana service center - 26,610
Other sales volumes (3) 4,350 3,829
Total sales volumes 718,445 1,060,134
Other Operating Data:
Number of operating bunkering tankers,
end of period (4) 12.0 20.0
Average number of operating bunkering
tankers (4)(5) 12.0 18.5
Number of operational floating storage
facilities, end of period (6) 1.0 3.0
As of As of
December 31, 2007 March 31, 2008
Unaudited Unaudited
(in thousands of U.S. dollars,
unless otherwise stated)
Balance Sheet Data:
Cash and cash equivalents 1,967 10,634
Gross trade receivables 193,257 183,909
Allowance for doubtful accounts (1,603) (1,360)
Inventories 97,140 98,258
Current assets 314,864 310,948
Total assets 566,957 583,648
Trade payables 105,055 131,082
Current liabilities (including
current portion of long-term debt) 251,335 244,598
Total debt 208,031 190,362
Total liabilities 323,232 331,135
Total stockholder's equity 243,725 252,513
Working Capital Data:
Working capital (7) 63,529 66,350
Working capital excluding cash and
debt (7) 190,212 160,110
(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, i.e., the amount the Company
pays its suppliers for those products. 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:
For the Three Months Ended March 31,
2007 2008
(in thousands of U.S. dollars,
unless otherwise stated)
Sales of marine petroleum products 211,677 530,372
Less: Cost of marine petroleum
products sold (193,588) (496,129)
Less: Cargo transportation costs - (2,617)
Gross spread on marine petroleum products 18,089 31,626
Less: Gross spread on lubricants (306) (193)
Gross spread on marine fuel 17,783 31,433
Sales volume of marine fuel (metric tons) 718,445 1,060,134
Gross spread per metric ton of marine
fuel sold (U.S. dollars) 24.8 29.7
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 service
center. 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 service centers include its physical supply operations
in the United Arab Emirates, Gibraltar, Jamaica, Singapore, Northern
Europe and Ghana, as well as Greece, where the Company conducts
operations through its related company, Aegean Oil.
Sales volumes of marine fuel attributed to each service center are
based on the point-of-delivery geographical location of the customer
vessels.
(3) Other sales volumes represent sales volumes of marine fuel not
attributed to any of the Company's service centers. From time to
time, the Company conducts limited marine fuel trading activities,
generally in locations where the Company does not have service
centers. This business involves activities whereby the Company
contracts with third party physical suppliers to sell the Company
marine fuel and to deliver the marine fuel to a customer in the
relevant port. These trading activities do not involve the Company's
physical possession of marine fuel and require less complex logistical
operations, and infrastructure. As such, the Company typically earns a
significantly lower gross spread from its trading activities than from
its physical supply activities.
(4) This data does not include the Company's Aframax tanker, the Leader,
and Panamax tankers, the Fos and the Ouranos, because these vessels
are classified as floating storage facilities.
(5) Average number of bunkering tankers is the number of bunkering tankers
in the Company's fleet for the relevant period, as measured by the sum
of the number of days each bunkering tanker was used as a 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.
(6) As of March 31, 2008, the Company used 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.
(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.
First Quarter 2008 Dividend Announcement
On May 13, 2008, the Company's Board of Directors declared a first
quarter 2008 dividend of $0.01 per share payable on June 6, 2008 to
shareholders of record as of May 23, 2008. 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 15, 2008, to
discuss its 2008 first quarter results. Investors may access the webcast,
and related slide presentation, by visiting the Company's website at
http://www.ampni.com, and clicking on the webcast link. The conference call also
may be accessed via telephone by dialing 877-795-3648 (for U.S.-based
callers) or 719-325-4766 (for international callers) and enter the
passcode: 1102674.
A replay of the webcast will be available soon after the completion of
the call and will be accessible on http://www.ampni.com. A telephone replay will
be available by dialing 888-203-1112 (for U.S.-based callers) or
719-457-0820 (for international callers) and enter the passcode: 1102674.
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. As a physical supplier, the
Company purchases marine fuel from refineries, major oil producers and
other sources. The Company sells and delivers these fuels to a diverse
group of ocean-going and coastal ship operators and marine fuel traders,
brokers and other users through its service centers in Greece, Gibraltar,
Singapore, Jamaica, the United Arab Emirates, Northern Europe, West Africa
and the United Kingdom.
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.
(See unaudited condensed consolidated financial statements attached)
AEGEAN MARINE PETROLEUM NETWORK INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2007 AND MARCH 31, 2008
(UNAUDITED)
(Expressed in thousands of U.S. dollars - except for share and per share data)
December 31, 2007 March 31, 2008
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,967 $ 10,634
Trade receivables, net of
allowance for doubtful accounts
of $1,603 and $1,360, as of
December 31, 2007 and March 31,
2008, respectively 191,654 182,549
Due from related companies 3,686 6,280
Inventories 97,140 98,258
Prepayments and other current assets 12,417 13,227
Restricted cash 8,000 -
Total current assets 314,864 310,948
FIXED ASSETS:
Advances for vessels under
construction and acquisitions 84,378 81,569
Vessels, cost 149,866 177,168
Vessels, accumulated depreciation (14,312) (17,021)
Vessels' net book value 135,554 160,147
Other fixed assets, net 1,431 1,563
Total fixed assets 221,363 243,279
OTHER NON-CURRENT ASSETS:
Restricted cash 10,171 7,849
Deferred charges, net 8,869 9,963
Concession Agreement 7,720 7,642
Goodwill 3,943 3,943
Other non-current assets 27 24
Total assets $566,957 $583,648
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings $133,000 $100,000
Current portion of long-term debt 3,650 4,394
Trade payables to third parties 77,862 114,111
Trade payables to related companies 27,193 16,971
Other payables to related companies 160 50
Accrued and other current liabilities 9,470 9,072
Total current liabilities 251,335 244,598
LONG-TERM DEBT, net of current portion 71,381 85,968
OTHER NON-CURRENT LIABILITIES 516 569
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value;
25,000,000 shares authorized,
none issued - -
Common stock, $0.01 par value;
100,000,000 shares authorized;
42,461,428 and 42,488,720 shares,
issued and outstanding at December 31,
2007 and March 31, 2008, respectively 425 425
Additional paid-in capital 187,795 188,182
Accumulated other comprehensive income - 1,327
Retained earnings 55,505 62,579
Total stockholders' equity 243,725 252,513
Total liabilities and stockholders'
equity $566,957 $583,648
The accompanying condensed notes are an integral part of these consolidated
financial statements
AEGEAN MARINE PETROLEUM NETWORK INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2008
(UNAUDITED)
(Expressed in thousands of U.S. dollars - except for share and per share data)
Three Months Ended March 31,
2007 2008
REVENUES:
Sales of marine petroleum products
- third parties $208,354 $526,002
Sales of marine petroleum products
- related companies 3,323 4,370
Voyage revenues 1,728 -
Other revenues 352 1,657
Total revenues 213,757 532,029
OPERATING EXPENSES:
Cost of marine petroleum products sold
- third parties 165,950 454,015
Cost of marine petroleum products sold
- related companies 27,638 42,114
Salaries, wages and related costs 4,509 8,422
Depreciation 1,306 2,770
Amortization of drydocking costs 928 839
Amortization of concession agreement - 78
Management fees 45 -
Other operating expenses 7,389 15,305
Total operating expenses 207,765 523,543
Operating income 5,992 8,486
OTHER INCOME/(EXPENSE):
Interest and finance costs (344) (2,368)
Interest income 926 135
Foreign exchange gains, net 15 1,251
597 (982)
Income before income taxes 6,589 7,504
Income taxes (1) (3)
Net income $6,588 $7,501
Basic earnings per common share $0.16 $0.18
Diluted earnings per common share $0.16 $0.18
Weighted average number of shares, basic 42,410,000 42,471,325
Weighted average number of shares, diluted 42,432,474 42,622,326
The accompanying condensed notes are an integral part of these consolidated
financial statements
AEGEAN MARINE PETROLEUM NETWORK INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2008
(UNAUDITED)
(Expressed in thousands of U.S. dollars)
Three Months Ended March 31,
2007 2008
Cash flows from operating activities:
Net income $6,588 $7,501
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation 1,306 2,770
Provision for doubtful accounts 302 (243)
Share-based compensation 260 387
Amortization 928 1,237
Other non-cash charges 208 70
Changes in assets and liabilities
Decrease (increase) in trade receivables (10,258) 9,348
Increase in due from related companies (3,427) (2,594)
Increase in inventories (4,078) (1,118)
Increase in prepayments and other current
assets (354) (810)
Increase in trade payables 3,086 26,027
Decrease in other payables to related
companies (98) (110)
Increase (decrease) in accrued and other
current liabilities 2,897 (397)
Decrease in other non-current assets - 3
Payments for dry-docking (921) (1,791)
Net cash provided by (used in) operating
activities (3,561) 40,280
Cash flows from investing activities:
Advances for vessels under construction (6,647) (22,080)
Advances for acquired assets (12,906) -
Purchase of other fixed assets (87) (193)
Decrease in restricted cash 1,216 10,322
Net cash used in investing activities (18,424) (11,951)
Cash flows from financing activities:
Proceeds from long-term debt 3,065 14,747
Repayment of long-term debt - (520)
Net change in short-term borrowings - (33,000)
Financing costs paid - (462)
Dividends paid (425) (427)
Net cash provided by (used in) financing
activities 2,640 (19,662)
Net increase (decrease) in cash and cash
equivalents (19,345) 8,667
Cash and cash equivalents at beginning of
period 82,425 1,967
Cash and cash equivalents at end of period $63,080 $10,634
The accompanying condensed notes are an integral part of these consolidated
financial statements
AEGEAN MARINE PETROLEUM NETWORK INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Expressed in thousands of U.S. dollars -
except share and per share data, unless otherwise stated)
1. Basis of Presentation and General Information: The accompanying unaudited consolidated financial statements include
the accounts of Aegean Marine Petroleum Network Inc. ("Aegean") and its
subsidiaries (Aegean and its subsidiaries are hereinafter collectively
referred to as the "Company") and have been prepared in accordance with
U.S. generally accepted accounting principles for interim financial
information. Accordingly, they do not include all the information and notes
required by U.S. generally accepted accounting principles for complete
financial statements.
These unaudited consolidated financial statements have been prepared on
the same basis as the annual financial statements and, in the opinion of
management, reflect all adjustments, which include only normal recurring
adjustments, considered necessary for a fair presentation of the Company's
financial position, results of operations and cash flows for the periods
presented. Operating results for the three months ended March 31, 2008 are
not necessarily indicative of the results that might be expected for the
fiscal year ended December 31, 2008.
The unaudited consolidated financial statements presented in this
report should be read in conjunction with the Company's audited combined
and consolidated financial statements and footnotes thereto as of and for
the year ended December 31, 2007.
2. Adoption of New Accounting Standards:
In February 2007, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 159, "The
Fair Value Option for Financial Assets and Financial Liabilities" ("SFAS
159"). SFAS 159 permits entities to choose to measure many financial
instruments and certain other items at fair value, with changes in fair
value recognized in earnings. SFAS 159 is effective as of the beginning of
the first fiscal year that begins after November 15, 2007. The adoption of
SFAS 159 did not have a material impact on the Company's financial
statements.
In September 2006, the FASB issued SFAS No. 157 "Fair Value
Measurements" ("SFAS 157"). This statement defines fair value, establishes
a framework for measuring fair value in generally accepted accounting
principles, and expands disclosures about fair value measurements. This
statement does not require any new fair value measurements, but applies
under other accounting pronouncements that require or permit fair value
measurements. SFAS 157 is effective for fiscal years beginning after
November 15, 2007 and interim periods within those fiscal years. The
adoption of SFAS 157 did not have a material impact on the Company's
financial statements.
3. Inventories:
The amounts shown in the accompanying consolidated balance sheets are
analyzed as follows:
December 31, March 31,
2007 2008
Held for sale:
Marine Fuel Oil 72,255 86,640
Marine Gas Oil 22,950 9,653
95,205 96,293
Held for consumption:
Marine fuel 1,195 1,038
Lubricants 646 822
Victuals 94 105
1,935 1,965
Total 97,140 98,258
4. Advances for Vessels Under Construction and Acquisitions: During the three months ended March 31, 2008, the movement of the
account, advances for vessels under construction and acquisitions, was as
follows:
Balance, January 1, 2008 84,378
Advances for vessels under construction
and related costs 24,493
Vessels delivered and operational (27,302)
Balance, March 31, 2008 81,569
On February 28, 2008, and in connection with the call option agreement
with the Qingdao Hyundai Shipbuilding Co. Ltd. ("Qingdao Hyundai"), the
Company signed four separate shipbuilding contracts with Qingdao Hyundai
for four 5,500 dwt, double skin, double bottom product oil tankers (hull
numbers QHS-225 to 228). The construction price of each contract is
$10,600, of which $3,180 is payable in advance, $2,120 is payable upon
steel-cutting, $2,120 is payable upon keel-laying, $2,120 is payable upon
launching and $1,060 is payable upon delivery and acceptance.
The amounts shown in the accompanying consolidated balance sheets
include advance and milestone payments relating to the shipbuilding
contracts with shipyards, advance and milestone payments relating to the
contracts with the engineering firm, advance payments for the acquisition
of assets, and any material related expenses incurred during the
construction periods which were capitalized.
As of March 31, 2008, advances for vessels under construction and
acquisitions, is analyzed as follows:
March 31, 2008
Year of
Expected Contract Contract Capitalized
Vessel Name Delivery Amount Payments Costs Total
Fujian Shipyard
DN-3500-6 2008 8,425 4,592 189 4,781
DN-3500-7 2008 8,425 3,973 150 4,123
DN-3500-8 2008 8,425 2,952 146 3,098
DN-3500-9 2008 8,425 2,953 128 3,081
DN-3500-10 2008 8,425 1,933 103 2,036
DN-3800-11* 2009 7,890 755 28 783
DN-3800-12* 2009 7,890 755 28 783
DN-3800-13* 2009 7,890 755 29 784
DN-3800-14* 2009 7,890 755 27 782
DN-3800-15* 2009 7,890 755 28 783
Severnav Shipyard
N 2220000 2008 13,169 8,573 733 9,306
N 2230007 2008 13,169 6,835 477 7,312
Qingdao Hyundai
Shipyard
QHS-207 2009 11,600 6,080 127 6,207
QHS-208 2009 11,600 4,080 116 4,196
QHS-209 2009 11,600 4,080 106 4,186
QHS-210 2009 11,600 4,080 114 4,194
QHS-215 2009 11,600 4,080 105 4,185
QHS-216 2009 11,600 2,000 99 2,099
QHS-217 2009 11,600 2,000 99 2,099
QHS-220 2008 11,000 7,930 283 8,213
QHS-221 2008 11,000 4,940 250 5,190
QHS-222 2009 11,000 1,020 88 1,108
QHS-223 2009 11,000 1,020 88 1,108
QHS-224 2009 11,000 1,020 112 1,132
QHS-225* 2009 10,600 - - -
QHS-226* 2010 10,600 - - -
QHS-227* 2010 10,600 - - -
QHS-228* 2010 10,600 - - -
Total 286,513 77,916 3,653 81,569
* Contract amount does not include the contract with the engineering
firm which, as of March 31, 2008, was not signed. This contract is expected
to be signed during 2008.
As of March 31, 2008, the remaining obligations under these contracts
are payable as follows:
Amount
April 1 to December 31, 2008 113,214
2009 92,203
2010 3,180
208,597
5. Vessels:
During the three months ended March 31, 2008, the movement of the account,
vessels, was as follows:
Accumulated Net Book
Cost Depreciation Value
Balance, January 1, 2008 149,866 (14,312) 135,554
- Vessels acquired and delivered 27,302 - 27,302
- Depreciation - (2,709) (2,709)
Balance, March 31, 2008 177,168 (17,021) 160,147
On January 18, 2008, the newly-constructed bunkering tanker, DN-3500-3
(subsequently named "Kithnos"), was operational in the Company's service
center in United Arab Emirates. The capitalized cost of this vessel of
$9,272, includes the construction cost of the vessel of $8,425 and
capitalized costs of $847.
On February 2, 2008, the newly-constructed bunkering tanker, DN-3500-4
(subsequently named "Amorgos"), was operational in the Company's service
center in Gibraltar. The capitalized cost of this vessel of $9,118,
includes the construction cost of the vessel of $8,425 and capitalized
costs of $693.
On March 29, 2008, the newly-constructed bunkering tanker, DN-3500-5
(subsequently named "Kimolos"), was operational in the Company's service
center in Singapore. The capitalized cost of this vessel of $8,912,
includes the construction cost of the vessel of $8,425 and capitalized
costs of $487.
6. Deferred Charges:
During the three months ended March 31, 2008, the movement of the
account, deferred charges, was as follows:
Drydocking Financing Costs Total
Balance, January 1, 2008 7,999 870 8,869
- Additions 1,791 462 2,253
- Amortization (839) (320) (1,159)
Balance, March 31, 2008 8,951 1,012 9,963
The amortization for drydocking costs is separately reflected in the
accompanying consolidated statements of income. The amortization of
financing costs is included in interest and finance costs in the
accompanying consolidated statements of income.
7. Total Debt:
The amounts comprising total debt are presented in the accompanying
consolidated balance sheets as follows:
December 31, March 31,
Loan Facility 2007 2008
Short-term borrowings:
Overdraft facility under senior secured
credit facility dated 12/21/2007 133,000 100,000
Total short-term borrowings 133,000 100,000
Long-term debt:
Secured syndicated term loan dated
10/26/2005 15,093 16,199
Secured syndicated term loan dated
8/30/2005 17,668 19,060
Secured term loan facility under
senior secured credit facility dated
12/19/2006 19,342 25,325
Secured term loan dated 10/25/2006 3,760 6,110
Secured term loan dated 10/27/2006 4,512 4,512
Secured syndicated term loan dated
10/30/2006 11,500 16,000
Secured term loan dated 7/5/2007 3,156 3,156
Total 75,031 90,362
Less: Current portion of long-term debt (3,650) (4,394)
Long-term debt, net of current portion 71,381 85,968
As of March 31, 2008, the Company had an available unutilized overdraft
line of $50,000 under its secured senior credit facility, and had an
available unutilized aggregate amount of $145,712 under its secured term
loan facilities.
The annual principal payments of long-term debt required to be made
after March 31, 2008, are as follows:
Amount
April 1 to December 31, 2008 3,020
2009 6,011
2010 6,782
2011 6,636
2012 6,392
2013 and thereafter 61,521
90,362
8. Other Operating Expenses:
The amounts in the accompanying consolidated statements of income are
analyzed as follows:
Three Months Ended March 31,
2007 2008
Bunkering tanker voyage expenses 45 183
Bunkering tanker insurance 299 396
Bunkering tanker repairs and maintenance 431 1,106
Bunkering tanker spares and consumable stores 332 618
Bunkering tanker consumption
of marine petroleum products 1,324 3,500
Cargo transportation - 2,617
Provision for doubtful accounts 302 (244)
Operating costs of Aegean Hellas 1,545 -
Operating costs of storage facilities 248 1,003
Other 2,863 6,126
Total 7,389 15,305
9. Contingencies: On November 30, 2005, an unrelated third party filed a declaratory
action against the Company before the First Instance Court of Piraeus. The
plaintiff asserts that he was instrumental in the negotiation of the
Company's Fuel Purchase Agreement with a government refinery in Jamaica,
and seeks a judicial affirmation of his alleged contractual right to
receive a commission of $1 per metric ton sold over the life of that
contract, which as per the plaintiff's calculation, amounts to $10,080 over
a period of 12 years. In 2007, the Court of First Instance ruled that the
claim is maritime-related and not within its jurisdiction. Accordingly, the
claim was referred to the Maritime Disputes Division of the Court of First
Instance in Piraeus. The case was re-scheduled to be heard on May 13, 2008.
The Company believes that this claim is unwarranted and lacking in merit,
and management is confident that the Company will not incur a material loss
in connection with this lawsuit.
Various claims, suits, and complaints, including those involving
government regulations and product liability, arise in the ordinary course
of business. In addition, losses may arise from disputes with charterers
and agents and insurance and other claims with suppliers relating to the
operations of the Company's vessels. Currently, management is not aware of
any such claims or contingent liabilities for which a provision should be
established in these consolidated financial statements.
The Company accrues for the cost of environmental liabilities when
management becomes aware that a liability is probable and is able to
reasonably estimate the Company's exposure. Currently, management is not
aware of any such claims or contingent liabilities for which a provision
should be established in these combined and consolidated financial
statements. The Company's Protection and Indemnity ("P&I") insurance
policies cover third-party liability and other expenses related to injury
or death of crew, passengers and other third parties, loss or damage of
cargo, claims arising from collisions with other vessels, damage to other
third-party property, and pollution arising from oil or other substances.
The Company's coverage under the P&I insurance policies, except for
pollution, is unlimited. Coverage for pollution is $1 billion per vessel
per incident.
10. Equity Incentive Plan:
The following table summarizes the status of the Company's unvested
restricted stock outstanding for the three months ended March 31, 2008:
Unvested Weighted Average
Restricted Stock Grant Date Fair Value
January 1, 2008 227,082 15.51
Vested (27,292) 14.06
March 31, 2008 199,790 15.71
The grant-date fair values of the restricted stock are determined by
the closing price of the Company's common stock traded on the NYSE on the
grant date. Total compensation cost of $387 was recognized and included
under salaries, wages and related costs in the accompanying condensed
consolidated statement of income for the three months ended March 31, 2008.
As of March 31, 2008, there was $1,764 of total unrecognized
compensation cost related to non-vested restricted stock awards, which is
expected to be recognized as compensation expense over a weighted average
period of 2.2 years as follows:
Amount
April 1 to December 31, 2008 792
2009 592
2010 291
2011 89
1,764
11. Common Stock and Additional Paid-In Capital: Aegean was formed on June 6, 2005, under the laws of Marshall Islands.
The Company's authorized common and preferred stock since inception
consisted of 100,000,000 common shares (all in registered form), par value
$0.01 per share and 25,000,000 preferred shares (all in registered form),
par value $0.01 per share.
As of March 31, 2008, the Company had no shares of preferred stock
issued and outstanding and had 42,488,720 shares of common stock, with a
par value of $0.01, issued and outstanding.
During the three months ended March 31, 2008, the Company declared and
paid dividends of $427.
12. Accumulated Other Comprehensive Income:
During 2008, the Company reported cumulative translation adjustments in
accumulated other comprehensive income, arising from the translation of the
financial statements of its Euro functional currency subsidiaries into U.S.
dollars. As of December 31, 2007 and March 31, 2008, the amount of
cumulative translation adjustments was $0 and $1,327, respectively.
13. Business Segments and Geographical Information:
The Company is primarily a physical supplier in the downstream marine
petroleum products industry. Marine petroleum products mainly consist of
different classifications of marine fuel oil, marine gas oil and
lubricants.
The Company cannot and does not identify expenses, profitability or
other financial performance measures by type of marine petroleum product
supplied, geographical area served, nature of services performed or on
anything other than on a consolidated basis (although the Company is able
to segregate revenues on these various bases). As a result, management,
including the chief operating decision maker, reviews operating results on
a consolidated basis only. Therefore, the Company has determined that it
has only one operating segment.
Information concerning the Company's total sales of marine petroleum
products is presented as follows, attributed based on the point-of-delivery
geographical locations of customer vessels:
Three Months Ended March 31,
2007 2008
Greece 28,616 43,637
Gibraltar 78,120 112,043
United Arab Emirates 39,959 127,525
Jamaica 45,528 74,991
Singapore 16,077 111,502
Northern Europe - 37,953
Ghana - 17,140
Other 3,377 5,581
Total 211,677 530,372
The Company's long-lived assets mainly consist of bunkering tankers
which are positioned across the Company's existing territories and which
management, including the chief operating decision maker, review on a
periodic basis and reposition among the Company's existing or new
territories to optimize the vessel per geographical territory ratio. The
Company's vessels operate within or outside the territorial waters of each
geographical location and, under international law, shipping vessels
usually fall under the jurisdiction of the country of the flag they sail.
The Company's vessels are not permanently located within particular
territorial waters and the Company is free to mobilize all its vessels
worldwide at its own discretion.
The following disclosure of the locations of long-lived assets is based
on the physical locations of the assets, which are not necessarily
indicative of the territories that have jurisdiction over such assets:
December 31, 2007 March 31, 2008
Gibraltar 39,510 38,359
United Arab Emirates 31,364 39,616
Jamaica 10,975 10,099
Singapore 29,245 37,898
Northern Europe 19,639 21,731
Ghana - 12,608
Other 6,252 1,399
Total 136,985 161,710
SOURCE Aegean Marine Petroleum Network Inc.
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Related links:
http://www.ampni.com/
CONTACT:
Aegean Marine Petroleum Network Inc.,
+1-212-763-5665, or investor@ampni.com; or Investor Relations,
Leon Berman, Principal of The IGB Group, +1-212-477-8438
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