Thu 17 May 2012, 07:17 GMT

Aegean posts rise in Q1 net income


First quarter net income climbs 50% year-on-year.



Marine fuel and lubricants supplier Aegean Marine Petroleum Network Inc. has announced that net income during the first quarter of 2012 rose by 50% year-on-year.

Net income for the three months ended March 31, 2012 increased to $6.0 million, or $0.13 basic and diluted earnings per share, up from $4.0 million, or $0.09 basic and diluted earnings per share, during the corresponding period last year.

Total revenues increased by 12.3% to $1,810.9 million compared to $1,611.9 million for the same period in 2011. Sales of marine petroleum products increased by 12.1% to $1,799.3 million compared to $1,605.4 million for the year-earlier period.

Gross profit, which equals total revenue less directly attributable cost of revenue, increased by 19.0% to $76.4 million compared to $64.2 million in the first three months of 2011.

The volume of marine fuel sold decreased by 9.7% to 2,461,230 metric tonnes, compared to 2,726,237 metric tonnes in the year-earlier period. Aegean said that this was due to the company maintaining its focus on executing transactions with creditworthy counterparties.

Operating income for the first quarter of 2012 increased to $13.4 million, up from $9.8 million for the same period in 2011.

Operating expenses, excluding directly attributable cost of revenue, increased by $8.6 million, or 15.8%, to $63.0 million during the first quarter compared to $54.4 million in 2011. The increase was said to be principally due to an expanded logistics infrastructure.

Commenting on the results, E. Nikolas Tavlarios, President, said: "Our results for the first quarter reflect the continued progress Aegean has achieved implementing its strategy aimed at steadily increasing profitability during a challenging market environment. For the three months ended March 31, 2012, we improved gross spread for the fifth consecutive quarter as we remain focused on executing transactions in a disciplined manner with creditworthy counterparties, streamlining our global operations and capitalizing on the demand for our comprehensive services.

"Consistent with our objective to expand Aegean's worldwide integrated marine fuel logistics chain, we recently completed our previously announced newbuilding program, a major milestone that further strengthens our Company's leading industry brand. We also entered into a strategic alliance that effectively extends our global reach to mainland China without incrementally increasing capital expenditures. With one of the largest double-hull bunkering delivery fleets in the world, combined with our increasing global scale, we have enhanced Aegean's potential to generate significant operating leverage and drive future earnings growth."

Liquidity and Capital Resources

As of March 31, 2012, the Company had cash and cash equivalents of $29.8 million and working capital of $77.2 million. Non-cash working capital, or working capital excluding cash and debt, was $541.2 million as of December 31, 2011.

Net cash used in operating activities was $28.7 million for the three months ended March 31, 2012. Net income, as adjusted for non-cash items, was $19.5 million for the period.

Net cash used in investing activities was $11.0 million for the three months ended March 31, 2012, mainly due to the advances for other fixed assets under construction.

Net cash provided by financing activities was $0.3 million for the three months ended March 31, 2012, primarily driven by the increase in net borrowings.

As of March 31, 2012, the vompany had $223.2 million in available liquidity, which includes unrestricted cash and cash equivalents and available undrawn amounts under the Company's working capital facilities, to finance working capital requirements.

Spyros Gianniotis, Chief Financial Officer, stated, "During the first quarter, we utilized our substantial liquidity, which includes more than $940 million in total working capital credit facilities, to manage higher bunkering fuel prices and continue to provide first-rate service to credit worthy customers. Our strong financial foundation, combined with the ongoing support we have received from our lending group, provide a competitive advantage that assists Aegean in meeting the significant working capital requirements in the global marine fuel supply industry. Going forward, we will continue to strengthen our balance sheet as we seek opportunities to increase profitability in our existing locations and further expand our vast network by entering new and attractive markets for the benefit of shareholders."

Subsequent to the quarter ended March 31, 2012, Aegean sold the Vera, a single hull bunkering tanker and the Fos, a floating storage facility. With these separate transactions, the company recorded a book loss of $4.7 million while generating cash proceeds of approximately $5.8 million and eliminating annual operating expenses of nearly $5 million related to these vessels.

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