Aegean 3Q, 9 Mo Results

Aegean Marine Petroleum Network Inc. (NYSE:ANW) announced financial and operating results for the third quarter and nine months ended September 30, 2008.

Third Quarter 2008 and Year-to-Date Highlights:
•    Increased sales volumes to 1,338,914 metric tons in Q3 2008 and 3,631,486 metric tons for the nine months ended September 30, 2008.
•    Generated gross spread on marine petroleum products of $44.4 million in Q3 2008 and $115.3 million for the nine months ended September 30, 2008.
•    Recorded operating income of $15.1 million in Q3 2008 and $36.0 million for the nine months ended September 30, 2008.
•    Reported adjusted net income, which excludes certain special items including $0.9 million relating to a tax accrual and $0.2 million relating to the automatic vesting of shares belonging to our deceased Director, of $10.6 million or $0.25 basic and diluted earnings per share for Q3 2008.
•    Net Income for the quarter was $9.5 million, or $0.22 basic and diluted earnings per share. Net Income for the nine months ended September 30, 2008 was $26.8 million, or $0.63 basic and diluted earnings per share.

Continued expanding global platform and infrastructure:
•    Acquired ICS Petroleum on July 1, 2008 expanding Aegean's operations to Vancouver, Montreal, and Mexico
•    Purchased three double-hull bunkering tankers
•    Took delivery of fourth double-hull bunkering tanker newbuilding to date this year and eighth since the Company's IPO in December 2006
•    Announced expansion into Trinidad & Tobago establishing Aegean in the Southern Caribbean market

The Company recorded net income of $9.5 million, or $0.22 basic and diluted earnings per share, for the three months ended September 30, 2008. For purposes of comparison, the company reported net income of $7.8 million, or $0.19 basic and $0.18 diluted earnings per share, for the three months ended September 30, 2007. The weighted average basic and diluted shares outstanding for the three months ended September 30, 2008 were 42,505,507 and 42,640,765, respectively. The weighted average basic and diluted shares outstanding for the three months ended September 30, 2007 were 42,410,000 and 42,532,289, respectively.

During the three months ended September 30, 2008, the company incurred certain special items totaling $1.1 million, of which $0.9 million related to a tax accrual in our Bunkers-at-Sea unit and $0.2 million related to the automatic vesting of shares belonging to our deceased Director. Regarding the tax item, Aegean is currently in the process of restructuring its Northern European business which it expects should lead to the elimination of this liability. Adjusted net income, excluding these items, was $10.6 million or $0.25 basic and diluted earnings per share.

Total revenues for the three months ended September 30, 2008, increased by 167.1% to $950.6 million compared to $355.9 million for the same period in 2007. For the three months ended September 30, 2008, sales of marine petroleum products increased by 167.4% to $948.6 million compared to $354.7 million for the year-earlier period.

Results for the third quarter of 2008 were driven by a 99.1% increase in the gross spread on marine petroleum products to $44.4 million compared to $22.3 million for the same period in 2007. For the three months ended September 30, 2008, the volume of marine fuel sold increased by 49.2% to 1,338,914 metric tons compared to 897,147 metric tons in the year-earlier period, as sales volumes improved significantly in Greece and Singapore. Furthermore, results for the third quarter of 2008 included sales volumes from Aegean's new markets, including Northern Europe (October 2007), West Africa (January 2008), U.K. (April 2008), and North America (July 2008). During the three months ended September 30, 2008, the gross spread per metric ton of marine fuel sold increased to $32.8 per metric ton, compared to $24.8 per metric ton during the three months ended September 30, 2007.

Operating income for the third quarter of 2008 was $15.1 million compared to $8.9 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 $31.3 million for the three months ended September 30, 2008 compared to $14.6 million for the same period in 2007. This increase was principally due to operating an expanded logistics infrastructure platform, comprised of a larger bunkering fleet and more storage facilities, during the third quarter of 2008 compared to the third quarter of 2007.

E. Nikolas Tavlarios, President, commented, "During the third quarter and year-to-date, Aegean continued growing sales volumes at a robust pace. For the three and nine months ended September 30, 2008, sales volumes increased 49.2% and 50.6%, respectively. The remains committed to further growing its global presence. During this past quarter, the company expanded into Canada and Mexico, through the acquisition of ICS Petroleum, and recently announced plans to enter the Southern Caribbean market in early 2009. We also increased our bunkering fleet over the quarter, taking delivery of our fourth double-hull bunkering tanker newbuilding, acquiring three second-hand double-hull vessels, and taking-on two barges. The Company expects to take delivery of 23 remaining newbuildings over the next two years. In maintaining our commitment to growth, management remains poised to further strengthen Aegean's leadership position and expand the Company's earnings power over the long term."

For the nine months ended September 30, 2008, the company recorded net income of $26.8 million, or $0.63 basic and diluted earnings per share, compared to net income of $21.5 million, or $0.51 basic and diluted earnings per share, for the nine months ended September 30, 2007. The weighted average basic and diluted shares outstanding for the nine months ended September 30, 2008 were 42,490,780 and 42,643,124, respectively. The weighted average basic and diluted shares outstanding for the nine months ended September 30 2007 were 42,410,000 and 42,475,004, respectively.

Total revenues for the first nine months ended September 30 2008 increased by 160.9% to $2,223.6 million compared to $852.3 million for the same period in 2007. For the nine months ended September 30 2008, sales of marine petroleum products increased by 161.3% to $2,217.6 million compared to $848.6 million for the same period in 2007.

Results for the nine months ended September 30, 2008 were led by a 90.9% increase in the gross spread on marine petroleum products to $115.3 million compared to $60.4 million for the same period a year ago. For the nine months ended September 30, 2008, the volume of marine fuel sold increased 50.6% to 3,631,486 metric tons compared to 2,410,874 metric tons in the year-earlier period. During the nine months ended September 30, 2008, the gross spread per metric ton of marine fuel sold increased to $31.5 per metric ton, compared to $24.9 per metric ton during the nine months ended September 30, 2007.

Operating income for the nine months ended September 30, 2008 was $36.0 million compared to $22.0 million for the same period in 2007. The increase in operating income was attributable to higher gross spreads (i.e. or net revenues) and improved operating leverage.
Liquidity and Capital Resources

As of September 30, 2008, the company had cash and cash equivalents of $30.1 million and working capital of $45.2 million. Non-cash working capital, or working capital excluding cash and debt, was $171.8 million as of September 30, 2008.

Net cash provided by operating activities was $27.4 million for the three months ended September 30, 2008. Net income, as adjusted for non-cash items, was $15.1 million for the period. During the three months ended September 30, 2008, the company utilized $14.4 million in cash and made drydocking payments of $2.1 million. Net cash provided by operating activities was $48.9 million for the nine months ended September 30, 2008.

Net cash used in investing activities was $56.9 million for the three months ended September 30, 2008, mainly due to additional payments of $35.4 million under the company's construction contracts with the shipyards, $12.4 million relating to the acquisition of second-hand bunkering vessels, and $9.1 million relating to the acquisition of ICS Petroleum. Net cash used in investing activities was $109.0 million for the nine months ended September 30, 2008.

Net cash provided by financing activities was $43.5 million for the three months ended September 30, 2008, mainly due to additional net drawdowns of $31.1 million under the company's term loan facilities to finance a portion of the company's newbuilding construction costs and $12.6 million representing an increase in the company's overdraft balances to finance working capital requirements. Net cash provided by financing activities was $88.2 million for the nine months ended September 30 2008.

As of September 30, 2008, the company had approximately $80.5 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, 2008, the Company had funds of approximately $145.6 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 posted solid financial results for the quarter. The successful integration of our acquisition of Vancouver-based ICS Petroleum combined with contributions from our other new markets led to considerable growth in sales volumes during the third quarter. We also benefited from significant improvements in Greece and Singapore. Our strong financial position, including a working capital surplus and attractive credit facilities, bodes well for management to further enhance sales volumes as we continue to execute our long-term growth strategy for the benefit of the Company and our shareholders."

(www.ampni.com)