Thu 26 May 2016 10:08

Aegean Marine Petroleum earnings call summary


Management team discusses key issues, including storage and delivery vessels, results in key markets and expected second-quarter volumes.



Aegean Marine Petroleum Network Inc held an earnings call on Wednesday, March 25, which followed the announcement of the company's first-quarter results on March 24. Please find below some of the key comments made by Nick Tavlarios, president.

The earnings call extracts also include questions from Kevin Sterling at BB&T Capital Markets.

South Africa

Nick Tavlarios: "In March, we announced our entry into Algoa Bay near Port Elizabeth and Peka, South Africa. I am pleased to report that this strategic investment is already beginning to yield results, offsetting some of the decline in activity we have seen in some of the other markets."

Americas

Nick Tavlarios: "North and South America, including the Caribbean, are especially strong performers. Certain markets are offsetting declines in others and we will continue to adjust our resources to align with favourable trends and shifts."

Fujairah

Nick Tavlarios: "In our Fujairah oil terminal, our storage facility continues to operate its strong efficiency levels and is now performing at 100 percent capacity. The bunkering market in Fujairah faces headwinds due to low prices driven primarily by the supply of marine fuel oil and strong competition in the market. However, the market remains an important part of our global supply network."

Storage Vessels

Nick Tavlarios: "We have one other storage vessel in Greece, it's called the Mediterranean, and the Champion is the one that we had in Fujairah. Retiring that saves roughly a little over $3 million annually."

Kevin Sterling: "That last vessel in Greece, do you plan to retire that - or is it - or do you plan to keep that? I understand retiring the one in Fujairah since you got the online facility, but what are your plans with the one in Greece?"

Nick Tavlarios: "At the present time, I think we're going to charter that out and from there we will see what we do with it, but they will be useful and we will actually get them back to the company."

Second-quarter sales volumes

Nick Tavlarios: "I think we will hover somewhere around that 4 million ton mark again. It's a little early to tell, but we're looking around that rate. I would say, 4.2 was a really very, very strong month [sic quarter]. Our objective here now is to get the best combination of volume and spreads to drive profitability."

Location of delivery vessels

Kevin Sterling: "You guys are moving vessels around, moving them from low margin ports, underutilized ports, to where you can more effectively utilize your equipment. It sounds like we're going to continue to see maybe some shifting of your equipment in the future. Is that going to be on a steady state basis, maybe one or two a quarter, or could it be lumpy?"

Nick Tavlarios: "We just moved the vessel from, actually, the Middle East into South Africa, and a move like that can cost close to $300,000 just on expenses alone. So yes, that would be in the quarter where it's not generating any revenue. Kevin, we're going to keep - that is - it is going to be a lumpy thing as you phrased it, but what is really good about our company is we know what is going on in each of the markets and we adapt, and that is why we continue to make money: we move to where the best business is. So, we will continue to again drive profitability by making prudent moves and managing any changes that occur."

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