Aegean Marine Petroleum Network Inc. Announces First Quarter 2008 Financial Results; Sales Volumes Increase 47.6%

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."

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.

Source: Aegean Marine Petroleum