) (“Aegean” or the “Company”) today announced financial and operating results for the second quarter ended June 30, 2017.
Second Quarter Financial Highlights
- Recorded sales volumes of 4,474,494 metric tons.
- Achieved gross profit of $82.2 million.
- Generated operating income of $16.2 million.
- Recorded net income attributable to Aegean shareholders of $1.7 million or $0.04 basic and diluted earnings per share.
- Generated EBITDA of $24.2 million.
Jonathan Mcilroy, Aegean’s President, commented, “During the second quarter of 2017, we continued to see challenging market conditions across the shipping and marine fuel space. While demand for marine fuel remains high, sales margins remain under pressure by a combination of low oil prices, depressed commercial shipping freight rates and fierce competition on the supply side.
“The new leadership team appointed in July 2017 focuses on four main objectives. To rationalize our global platform delivering on asset optimization; to execute on the cost saving initiative; to capitalize on key business development projects and to generate new revenue streams that leverage our global platform and built-in capacity.
“In this context, and within the challenging market conditions I described, Aegean achieved a solid performance in the second quarter of 2017. Compared to Q1 2017, the Company achieved higher sales volume with improved profit margins. Furthermore, we reduced operational expenses and improved our profitability. While more work remains to be done in the cost reduction area, we are on our way to executing on specific initiatives positioning us well to benefit from any market up turns.
“Executing on asset optimization, we are moving assets out of congested areas where they are underutilized and move them to other areas within our network where they can be better utilized and with higher margins. At the same time, we are selling or leasing assets to third parties.
“In terms of new business development, in Q2 2017 we announced the launching of a new service center in Savannah, Georgia, the third largest container port in the United States. Furthermore, we established a bunker trading office in Dubai and presence in Taiwan. Also, the acquisition of OBAST Bunkering & Trading GmbH in Rostock, which we announced in Q1, is contributing to our business in Germany.
“We are further leveraging Aegean’s global infrastructure and branding by pursuing a growth strategy that does not require intensive capital expenditures. We seek to enter new areas or to maintain our presence in key hubs by teaming with local operators.”
Spyros Gianniotis, Aegean’s Chief Financial Officer, stated, “Comparing Q2 2017 to Q1 2017, there was 0.5% increase in sales volumes, indicating the sustainability of cargo volumes and Aegean’s marketing prowess from last quarter. During the quarter, we improved our profit margin and reduced our operating expenses. As a result, we achieved a 2.4% increase in Gross Profit, a 10.0% increase in adjusted EBITDA, a 16.6% increase in adjusted Operating Income and a 22.3% increase in adjusted Net Income.
“The higher volumes and improved gross spread contributed to higher gross profit by $1.9 million from previous quarter to $82.2 million. Despite higher expense by $2.6 million for the restricted shares granted to personnel, all other expenses were reduced by $3.0 million compared to the previous quarter resulting in an operating income of $16.2 million.
“Our interest expense has increased to $14.8 million as a result of a decrease in the mark to market of our 5 years interest rate swaps which however continue to be well in the money. The interest expense line contains $4.9 million of non-cash items like amortizing bank fees, notes discount and the MTM of the interest rate swaps. This number in the previous quarter was $2.7 million. Adjusting for the above-mentioned amounts results in $9.2 million non-US GAAP net income.
“On the cost cutting front we have already implemented measures that will result in annual savings of approximately $7 million as of Q3 2017. We are targeting another $13 million of cost reduction by reshuffling the older vessels and controlling other administrative expenses.
“We continue to have excellent relationship with our big number of banks participating in all our facilities. As of last week we renewed for another year the Aegean’s USA facility of $250 million and we are currently working to renew the global facility for the rest of the business. Both facilities have been or will be extended at improved terms.”
- Revenue - The Company reported total revenue of $1,440.7 million for the second quarter of 2017, an increase of 45.9% compared to the same period in 2016, primarily due to the increase in oil prices. Voyage and other revenues decreased to $18.9 million or by 4.3% compared to the same period in 2016.
- Gross Profit - Gross Profit, which equals total revenue less directly attributable cost of revenue decreased by 11.9% to $82.2 million in the second quarter of 2017 compared to $93.4 million in the same period in 2016.
- Operating Expense - The Company reported operating expense of $66.0 million for the second quarter of 2017, an increase of $1.5 million or 2.3% compared to the same period in prior year.
- Operating Income - Operating income for the second quarter of 2017 adjusted for the sale of non-core assets was $16.2 million, a decrease of 48.4% compared to the same period in the prior year.
- Net Income - Net income attributable to Aegean shareholders adjusted for the sale of non-core vessels was $1.7 million, or $0.4 basic and diluted earnings per share, a decrease of $14.3 million or 89.6% compared to the same period in 2016.
- Sales Volume - For the three months ended June 30, 2017, the Company reported marine fuel sales volumes of 4,474,494 metric tons, an increase of 9.3% compared to the same period in 2016.
- Adjusted EBITDA Per Metric Ton of Marine Fuel Sold - For the three months ended June 30, 2017, the Company reported adjusted EBITDA per metric ton of marine fuel sold of $5.39. Adjusted EBITDA per metric ton of marine fuel sold in the prior year period was $9.26 per metric ton.
- Gross Spread Per Metric Ton of Marine Fuel Sold - For the three months ended June 30, 2017, the Company reported gross spread per metric ton of marine fuel sold on an aggregate basis of $16.8. Gross spread per metric ton of marine fuel sold in the prior year period was $20.9.
Liquidity and Capital Resources
- Net cash provided by operating activities was $18.7 million for the three months ended June 30, 2017. Net income as adjusted for non-cash items (as defined in Note 9 below) was $18.4 million for the same period.Net cash provided by investing activities was $0.1 million for the three months ended June 30, 2017.
- Net cash provided by financing activities was $3.2 million for the three months ended June 30, 2017.
- As of June 30, 2017, the Company had cash and cash equivalents of $82.5 million and working capital of $442.6 million. Non-cash working capital, or working capital excluding cash and debt, was $709.7 million.
- As of June 30, 2017, the Company had $842.4 million of undrawn amounts under its working capital facilities and $82.5 million of unrestricted cash and cash equivalents to finance working capital requirements.
- The weighted average basic and diluted shares outstanding for the three months ended June 30, 2017, was 38,217,254. The weighted average basic and diluted shares outstanding for the three months ended June 30, 2016 was 48,117,508.
|Summary Consolidated Financial and Other Data (Unaudited)|
|For the Three Months Ended June 30,||For the Six Months Ended June 30,|
|(in thousands of U.S. dollars, unless otherwise stated)|
|Income Statement Data:|
|Revenues - third parties||$||982,337||$||1,436,241||$||1,730,853||$||2,955,266|
|Revenues - related companies||5,219||4,418||9,635||9,651|
|Cost of revenues - third parties||876,495||1,336,306||1,538,121||2,760,586|
|Cost of revenues- related companies||17,682||22,107||28,120||41,752|
|Total cost of revenues||894,177||1,358,413||1,566,241||2,802,338|
|Selling and distribution||49,943||53,058||100,715||107,943|
|General and administrative||11,823||12,854||23,319||24,269|
|Amortization of intangible assets||297||168||597||335|
|Loss on sale of vessels||2,437||(67||)||2,437||(67||)|
|Net financing cost||(12,477||)||(14,716||)||(21,838||)||(26,789||)|
|Foreign exchange (losses) / gains, net||(1,922||)||290||(1,683||)||597|
|Income tax (expense) / benefit||(947||)||(93||)||1,645||(822||)|
|Less income/(loss) attributable to non-controlling interest||8||(9||)||8||8|
|Net income attributable to AMPNI shareholders||$||13,525||$||1,723||$||25,295||$||3,077|
|Basic earnings per share (U.S. dollars)||$||0.27||$||0.04||$||0.51||$||0.08|
|Diluted earnings per share (U.S. dollars)||$||0.27||$||0.04||$||0.51||$||0.08|
|Other Financial Data:|
|Gross spread on marine petroleum products(2)||$||86,504||$||75,907||$||161,572||$||149,058|
|Gross spread on lubricants(2)||1,031||725||1,765||1,351|
|Gross spread on marine fuel(2)||85,473||75,182||159,807||147,707|
|Gross spread per metric ton of marine fuel sold (U.S. dollars) (2)||20.9||16.8|