Aegean Marine Petroleum Network Inc. Announces Record Fourth Quarter and Full Year 2008 Financial Results

Full Year 2008 Net Income Increases 44.0%; Sales Volumes Climb 51.3%

PIRAEUS, Greece, Feb. 25 /PRNewswire-FirstCall/ — Aegean Marine Petroleum Network Inc. (NYSE: ANW) today announced financial and operating results for the fourth quarter and the year ended December 31, 2008.

Highlights

• Increased sales volumes to 1,568,770 metric tons in Q4 2008 and 5,200,256 metric tons for the full year.
• Expanded net revenues to $51.6 million in Q4 2008 and $170.9 million for 2008.
• Generated gross spread on marine petroleum products of $47.7 million in Q4 2008 and $161.0 million for the full year.
• Recorded operating income of $18.3 million in Q4 2008 and $52.1 million for the full year.
• Reported adjusted net income, which excludes a $1.0 million tax expense, of $14.1 million, or $0.33 basic and diluted earnings per share for Q4 2008. Net Income for the quarter was $13.1 million, or $0.31 basic and diluted earnings per share. Net Income for the full year was $39.9 million, or $0.94 basic and diluted earnings per share.
• Continued expanding global presence and infrastructure:
  • Announced expansion into Trinidad and Tobago (Southern Caribbean) and Tangiers (Morocco), increasing our presence to 13 markets worldwide.
  • Took delivery of seven double-hull bunkering tanker newbuildings in 2008 and year-to-date in 2009.
  • Acquired four double-hull bunkering tankers and two bunkering barges in the secondary market in 2008 and year-to-date in 2009.
• Implemented a $25 million stock repurchase program.

The Company recorded net income of $13.1 million, or $0.31 basic and diluted earnings per share, for the three months ended December 31, 2008. For purposes of comparison, the Company reported net income of $6.3 million, or $0.15 basic and diluted earnings per share, for the three months ended December 31, 2007. The weighted average basic and diluted shares outstanding for the three months ended December 31, 2008 were 42,517,249 and 42,525,507, respectively. The weighted average basic and diluted shares outstanding for the three months ended December 31, 2007 were 42,438,214 and 42,618,362, respectively.

During the three months ended December 31, 2008, the Company incurred a $1.0 million tax expense related to its Canadian unit. Aegean is currently in the process of restructuring its Canadian business and expects to significantly decrease its income tax liability in this jurisdiction going forward. Adjusted net income, excluding this tax expense, was $14.1 million or $0.33 basic and diluted earnings per share.

Total revenues for the three months ended December 31, 2008, increased by 10.7% to $554.3 million compared to $500.6 million for the same period in 2007. For the three months ended December 31, 2008, sales of marine petroleum products increased by 10.7% to $550.5 million compared to $497.3 million for the year-earlier period. Net revenues, which equal total revenues less cost of goods sold and cargo transportation costs, increased 58.3% to $51.6 million in the fourth quarter of 2008 compared to $32.6 million in the year-earlier period.

Results for the fourth quarter of 2008 were driven by a 62.8% increase in the gross spread on marine petroleum products to $47.7 million compared to $29.3 million for the same period in 2007. For the three months ended December 31, 2008, the volume of marine fuel sold increased by 52.8% to 1,568,770 metric tons compared to 1,026,395 metric tons in the year-earlier period, as sales volumes improved significantly in Greece and Singapore. Furthermore, results for the fourth quarter of 2008 included sales volumes from Aegean’s new markets: West Africa (January 2008), U.K. (April 2008), and North America (July 2008). During the three months ended December 31, 2008, the gross spread per metric ton of marine fuel sold increased to $30.2 per metric ton, compared to $28.4 per metric ton in the year-earlier period. In the fourth quarter of 2008, the Company adopted a change in its method of calculating gross spread, described below in this release. Before taking into account for this change, gross spread per metric ton for the fourth quarter 2008 was $32.5.

Operating income for the fourth quarter of 2008 was $18.3 million compared to $8.8 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 $33.3 million for the three months ended December 31, 2008 compared to $23.8 million for the same period in 2007. This increase was principally due to operating an expanded logistics infrastructure, comprised of a larger bunkering fleet and more storage facilities, during the fourth quarter of 2008 compared to the fourth quarter of 2007.

E. Nikolas Tavlarios, President, commented, “Aegean’s record financial performance for the fourth quarter and full year 2008 highlights our success in executing management’s well-capitalized growth strategy and meeting the strong demand for our integrated marine fuel services. As we continued to increase our global market share during a challenging economic environment, we reported an increase in both net income and sales volumes of 44.0% and 51.3%, respectively, while strengthening Aegean’s position for future growth. Specifically, we once again expanded our global platform by entering new markets in Vancouver, Montreal and Mexico during 2008. We also grew our logistics infrastructure with the delivery of six double-hull bunkering tanker newbuildings during the year. In further improving our ability to capitalize on the increased demand for modern tonnage created by the regulatory phase-out of single-hull vessels, we have taken delivery of two double-hull bunkering tankers to date in 2009.”

Mr. Tavlarios added, “We expect to commence operations in Tangiers, Morocco and Trinidad and Tobago in the second quarter of 2009 and expect to take delivery of 20 additional double-hull bunkering tanker newbuilds by the end of 2010, significantly expanding Aegean’s earnings potential. In maintaining our focus on profitable growth, we intend to take advantage of our strong financial position, a core differentiator for Aegean, to further enhance our leading brand and drive future results.”

For the year ended December 31, 2008, the Company recorded net income of $39.9 million, or $0.94 basic and diluted earnings per share, compared to net income of $27.7 million, or $0.65 basic and diluted earnings per share, for the prior year. The weighted average basic and diluted shares outstanding for the year ended December 31, 2008 were 42,497,450 and 42,625,801, respectively. The weighted average basic and diluted shares outstanding for the year ended December 31 2007 were 42,417,111 and 42,505,704, respectively.

Total revenues for the year ended December 31, 2008 increased by 105.3% to $2,778.0 million compared to $1,352.9 million for the same period in 2007. For the year ended December 31, 2008, sales of marine petroleum products increased by 105.7% to $2,768.1 million compared to $1,345.8 million for the same period in 2007. Net revenues for the full year 2008 increased 76.7% to $170.9 million compared to $96.7 million in 2007.

Results for the year ended December 31, 2008 were led by a 79.5% increase in the gross spread on marine petroleum products to $161.0 million compared to $89.7 million for the same period a year ago. For the year ended December 31, 2008, the volume of marine fuel sold increased 51.3% to 5,200,256 metric tons compared to 3,437,269 metric tons in the year-earlier period. During the year ended December 31, 2008, the gross spread per metric ton of marine fuel sold increased to $30.7 per metric ton, compared to $25.9 per metric ton for the year prior. In the fourth quarter of 2008, the Company adopted a change in its method of calculating gross spread, described below in this release. Before taking into account for this change, gross spread per metric ton for the full year 2008 was $31.8.

Operating income for the year ended December 31, 2008 was $52.1 million compared to $30.8 million for the same period in 2007. The increase in operating income was attributable to higher gross spreads (or net revenues) and improved operating leverage.

Liquidity and Capital Resources

As of December 31, 2008, the Company had cash and cash equivalents of $46.9 million and working capital of $49.4 million. Non-cash working capital, or working capital excluding cash and debt, was $100.2 million as of December 31, 2008.

Net cash provided by operating activities was $87.8 million for the three months ended December 31, 2008. Net income, as adjusted for non-cash items, was $19.7 million for the period. Net cash provided by operating activities was $136.7 million for the year ended December 31, 2008.

Net cash used in investing activities was $26.7 million for the three months ended December 31, 2008, mainly due to additional payments of $18.5 million under the Company’s construction contracts with the shipyards and $8.3 million relating to the acquisition of second-hand bunkering vessels. Net cash used in investing activities was $135.7 million for the year ended December 31, 2008.

Net cash used for financing activities was $44.3 million for the three months ended December 31, 2008, primarily driven by a decrease of $59.6 million in the Company’s short-term borrowings, as a consequence of lower marine fuel prices and an improvement in the cash conversion cycle. Net cash provided by financing activities was $43.9 million for the year ended December 31, 2008.

As of December 31, 2008, the Company had approximately $296.9 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 December 31, 2008, the Company had funds of approximately $124.8 million available under its secured term loans to finance the construction of its new double-hull bunkering tankers.

Spyros Gianniotis, Chief Financial Officer, stated, “Our record results for the fourth quarter were led by strong sales volume growth in Singapore and Greece, where the phase-out of single-hull vessels is complete, as well as contributions from new markets. As Aegean strengthened its ability to benefit from the positive industry fundamentals and enhanced its competitive position, the Company continues to maintain its considerable financial strength. With our new $300 million senior secured credit facility, we intend to further execute our growth plan and expand Aegean’s leading role as a global independent supplier of marine fuel to blue-chip customers. Complementing this proven approach, we intend to seek opportunities under our $25 million share repurchase program to create additional value for shareholders.”

Summary Consolidated Financial and Other Data (Unaudited)

                          For the Three Months           For the Year Ended
                            Ended December 31,               December 31,
                             2007           2008          2007        2008

                      (in thousands of U.S. dollars, unless otherwise stated)
    Income Statement
     Data:
    Sales of marine
     petroleum products   $497,260       $550,497    $1,345,849   $2,768,067
    Voyage and other
     revenues                3,331          3,851         7,024        9,905
    Total revenues         500,591        554,348     1,352,873    2,777,972
    Cost of marine
     petroleum products
     sold                  465,806        499,677     1,251,712    2,594,443
    Salaries, wages and
     related costs           9,533         12,282        24,363       41,666
    Depreciation and
     amortization            2,986          4,699         9,597       16,557
    Gain on sale of
     vessel                      -              -        (2,693)           -
    All other operating
     expenses               13,450         19,421        39,096       73,157
    Operating income         8,816         18,269        30,798       52,149
    Net financing cost
     (income)                1,835          3,957         1,483       11,876
    FX losses (gains),
     net                       719            251         1,569       (1,521)
    Income Taxes                 7            989             8        1,879
    Net income              $6,255        $13,072       $27,738      $39,915

    Basic and diluted
     earnings per share
     (U.S. dollars)          $0.15          $0.31         $0.65        $0.94
    Diluted earnings
     per share (U.S.
     dollars)                $0.15          $0.31         $0.65        $0.94

    Other Financial Data:
    Gross spread on
     marine petroleum
     products(1)           $29,303        $47,728       $89,671     $160,963
    Gross spread on
     lubricants(1)             141            334           536        1,298
    Gross spread on
     marine fuel(1)         29,162         47,394        89,135      159,665
      Gross spread per
       metric ton of
       marine fuel sold
       (U.S. dollars) (1)     28.4           30.2          25.9         30.7
    Net cash provided
     by (used in)
     operating
     activities            (84,902)        87,845      (128,128)     136,737
    Net cash used in
     investing
     activities             39,487         26,694       124,692      135,667
    Net cash provided
     by (used for)
     financing
     activities           $127,900       $(44,334)     $172,362      $43,890

    Sales Volume
     Data (Metric
     Tons):(2)
    Greece                 111,179        241,130       427,685      695,848
    Gibraltar              300,385        254,395     1,143,458    1,008,875
    UAE                    247,481        262,639       728,098      987,952
    Jamaica                130,090        118,440       562,656      522,206
    Singapore              166,892        374,129       488,876    1,128,407
    Northern Europe         65,709         82,909        65,709      278,545
    West Africa                  -         61,196             -      174,567
    UK (Portland)                -         40,754             -      114,208
    Vancouver                    -         72,469             -      157,042
    Other sales
     volumes(3)              4,659         60,709        20,787      132,606
    Total sales volumes  1,026,395      1,568,770     3,437,269    5,200,256

    Other Operating Data:
    Bunkering fleet,
     end of period
     number(4)                17.0           30.0          17.0         30.0
    Bunkering fleet,
     average number for
     the period(4)(5)         16.1           27.2          13.5         22.7
    RoRo Vessels,
     end of period number      0.0            1.0           0.0          1.0
    Special Purpose Vessels,
     end of period number(6)   0.0            1.0           0.0          1.0
    Number of owned storage
     facilities, end of
     period((7))               2.0            4.0           2.0          4.0

Summary Consolidated Financial and Other Data (Unaudited)

                                              As of             As of
                                       December 31, 2007   December 31, 2008

                                            (in thousands of U.S. dollars,
                                               unless otherwise stated)
    Balance Sheet Data:
    Cash and cash equivalents                   1,967               46,927
    Gross trade receivables                   193,257              132,589
    Allowance for doubtful accounts            (1,603)              (1,323)
    Inventories                                97,140               55,330
    Current assets                            314,864              251,387
    Total assets                              566,957              641,907
    Trade payables                            105,055               90,279
    Current liabilities (including
     current portion of long-term debt)       251,335              202,022
    Total debt                                208,031              253,621
    Total liabilities                         323,232              356,904
    Total stockholder's equity                243,725              285,003

    Working Capital Data:
    Working capital(8)                         63,529               49,365
    Working capital excluding cash and
     debt(8)                                  190,212              100,158

             1. Gross spread on marine petroleum products represents the
                margin the Company generates on sales of marine fuel and
                lubricants.  Gross spread on marine fuel represents the margin
                that the Company generates on sales of various classifications
                of marine fuel oil ("MFO") or marine gas oil ("MGO"). Gross
                spread on lubricants represents the margin that the Company
                generates on sales of lubricants. The Company calculates the
                above-mentioned gross spreads by subtracting from the sales of
                the respective marine petroleum product the cost of the
                respective marine petroleum product sold and cargo
                transportation costs. For arrangements in which the Company
                physically supplies the respective marine petroleum product
                using its bunkering tankers, costs of the respective marine
                petroleum products sold represents amounts paid by the Company
                for the respective marine petroleum product sold in the
                relevant reporting period. For arrangements in which the
                respective marine petroleum product is purchased from the
                Company's related company, Aegean Oil S.A., or Aegean Oil,
                cost of the respective marine petroleum products sold
                represents the total amount paid by the Company to the
                physical supplier for the respective marine petroleum product
                and its delivery to the customer. For arrangements in which
                the Company purchases cargos of marine fuel for its floating
                storage facilities, transportation costs may be included in
                the purchase price of marine fuels from the supplier or may be
                incurred separately from a transportation provider.

                Gross spread per metric ton of marine fuel sold represents the
                margin the Company generates per metric ton of marine fuel
                sold. The Company calculates gross spread per metric ton of
                marine fuel sold by dividing the gross spread on marine fuel
                by the sales volume of marine fuel. Marine fuel sales do not
                include sales of lubricants. The following table reflects the
                calculation of gross spread per metric ton of marine fuel sold
                for the periods presented:

Summary Consolidated Financial and Other Data (Unaudited)

                                 For the Three
                                  Months Ended            For the Year Ended
                                   December 31,               December 31,
                               2007          2008          2007         2008
                                     (in thousands of U.S. dollars, unless
                                              otherwise stated)
    Sales of marine
     petroleum products     497,260       550,497     1,345,849    2,768,067
      Less: Cost of
       marine petroleum
       products sold       (465,806)     (499,677)   (1,251,712)  (2,594,443)
      Less: Cargo
       transportation
       costs                 (2,151)       (3,092)       (4,466)     (12,661)
    Gross spread on
     marine petroleum
     products                29,303        47,728        89,671      160,963
      Less: Gross spread
       on lubricants           (141)         (334)         (536)      (1,298)
    Gross spread on
     marine fuel             29,162        47,394        89,135      159,665

    Sales volume of
     marine fuel
     (metric tons)        1,026,395     1,568,770     3,437,269    5,200,256

    Gross spread per
     metric ton of
     marine
    fuel sold (U.S.
     dollars)                  28.4          30.2          25.9         30.7

                The Company previously reported FX fluctuations from the
                recording of intercompany purchases and sales of marine
                petroleum products, in the data line known as FX losses,
                (gains), net.  As of the 4th quarter of 2008 such (losses) or
                gains due to FX fluctuations from the recording of
                intercompany purchases and sales of marine petroleum products,
                are reported under cost of marine petroleum products. This
                change would not have had a significant impact on the gross
                margin of previous quarters due to the  relative size of such
                fluctuations. Under the previous calculation formula, gross
                spread per metric ton would have been $32.5 for the fourth
                quarter 2008 and $31.8 for the full year 2008.

                The amount that the Company has to pay for marine petroleum
                products to fulfill a customer order has been the primary
                variable in determining the prices quoted to customers.
                Therefore, the Company evaluates gross spread per metric ton
                of marine fuel sold in pricing individual transactions and in
                long-term strategic pricing decisions. The Company actively
                monitors its pricing and sourcing strategies in order to
                optimize its gross spread on marine petroleum products. The
                Company believes that this measure is important to investors
                because it is an effective intermediate performance measure of
                the strength of the Company's operations.

                Gross spread on marine petroleum products, including gross
                spread on marine fuel and gross spread on lubricants, and
                gross spread per metric ton of marine fuel sold should not be
                considered as alternatives to operating income, net income or
                other GAAP measures and may not be comparable to similarly
                titled measures of other companies. These measures do not
                reflect certain direct or indirect costs of delivering marine
                petroleum products to the Company's customers (such as crew
                salaries, vessel depreciation, storage costs, other vessel
                operating expenses or overhead costs) or other costs of doing
                business.

                For all periods presented, the Company purchased marine
                petroleum products in Greece from its related company, Aegean
                Oil, which is a physical supplier in Greece. The cost of these
                marine petroleum products was contractually calculated based
                on Aegean Oil's actual cost of these products plus a margin.

             2. Sales volume data details the volume of marine fuel sold per
                service center. Sales volume of marine fuel is the volume of
                sales of various classifications of MFO and MGO for the
                relevant period and is denominated in metric tons. The Company
                does not use the sales volume of lubricants as an indicator.

                The Company's markets include its physical supply operations
                in the United Arab Emirates, Gibraltar, Jamaica, Singapore,
                Northern Europe, Ghana, Vancouver, Portland (U.K.), and
                Greece, where the Company conducts operations through its
                related company, Aegean Oil.  Aegean expects to commence
                operations in Trinidad and Tobago (Southern Caribbean) and
                Tangiers (Morocco) in Q2 2009.

                Sales volumes of marine fuel attributed to each market are
                based on the point-of-delivery geographical location of the
                customer vessels.

             3. Other sales volumes represent sales volumes of marine fuel in
                which the Company acts as a broker or trader and does not
                physically supply the product to end-user.

             4. Bunkering fleet comprises both bunkering vessels and barges.

             5. Figure represents average bunkering fleet number for the
                relevant period, as measured by the sum of the number of days
                each bunkering tanker or barge was used as part of the fleet
                during the period divided by the cumulative number of calendar
                days in the period multiplied by the number of bunkering
                tankers at the end of the period.   This figure does not take
                into account non-operating days due to either scheduled or
                unscheduled maintenance.

             6. Special Purpose Vessels consists of the Orion, a 550 dwt
                tanker which is based in our U.K. market.

             7. As of December 31, 2008, the Company used its two Panamax
                tankers, the Ouranos and the Fos, as floating storage
                facilities in the United Arab Emirates and Ghana,
                respectively, and its Aframax tanker, the Leader, as a
                floating storage facility in Gibraltar.

                The ownership of floating storage facilities allows the
                Company to mitigate its risk of supply shortages. Generally,
                 storage costs are included in the price of refined marine
                fuel quoted by local suppliers. The Company expects that the
                ownership of floating storage facilities will allow it to
                convert the variable costs of this storage fee mark-up per
                metric ton quoted by suppliers into fixed costs of operating
                its owned storage facilities, thus enabling the Company to
                spread larger sales volumes over a fixed cost base and to
                decrease its refined fuel costs.

             8. Working capital is defined as current assets minus current
                liabilities. Working capital excluding cash and debt is
                defined as current assets minus cash and cash equivalents
                minus restricted cash minus current liabilities plus short-
                term borrowings plus current portion of long-term debt.

Fourth Quarter 2008 Dividend Announcement

On February 25, 2009, the Company’s Board of Directors declared a fourth quarter 2008 dividend of $0.01 per share payable on March 19, 2009, to shareholders of record as of March 5, 2009. The dividend amount was determined in accordance with the Company’s dividend policy of paying cash dividends on a quarterly basis subject to factors including the requirements of Marshall Islands law, future earnings, capital requirements, financial condition, future prospects and such other factors as are determined by the Company’s Board of Directors. The Company anticipates retaining most of its future earnings, if any, for use in operations and business expansion.

Conference Call and Webcast Information

Aegean Marine Petroleum Network Inc. will conduct a conference call and simultaneous Internet webcast at 11:30 a.m. ET on Thursday, February 26, 2009, to discuss its fourth quarter results. Investors may access the webcast and related slide presentation, by visiting the Company’s website at www.ampni.com, and clicking on the webcast link. The conference call also may be accessed via telephone by dialing (877) 857-6177 (for U.S.-based callers) or (719) 325-4788 (for international callers) and enter the passcode: 4789635.

A replay of the webcast will be available soon after the completion of the call and will be accessible on www.ampni.com. A telephone replay will be available through Thursday, March 12, 2009, by dialing 888-203-1112 (for U.S.-based callers) or 719-457-0820 (for international callers) and enter the passcode: 4789635.

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. The Company procures product from various sources (such as refineries, oil producers, and traders) and resells it to a diverse group of customers across all major commercial shipping sectors and leading cruise lines. Currently, Aegean has a global presence in 13 markets, including Vancouver, Montreal, Mexico, Jamaica, West Africa, Gibraltar, U.K., Northern Europe, Greece, the United Arab Emirates as well as Singapore, and plans to commence operations in Tangiers, Morocco and Trinidad and Tobago.

Cautionary Statement Regarding Forward-Looking Statements

Matters discussed in this press release may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.

The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words “believe,” “intend,” “anticipate,” “estimate,” “project,” “forecast,” “plan,” “potential,” “may,” “should,” “expect” and similar expressions identify forward-looking statements. The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, our management’s examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.

In addition to these important factors, other important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include our ability to manage growth, our ability to maintain our business in light of our proposed business and location expansion, our ability to obtain double hull secondhand bunkering tankers, the outcome of legal, tax or regulatory proceedings to which we may become a party, adverse conditions in the shipping or the marine fuel supply industries, our ability to retain our key suppliers and key customers, material disruptions in the availability or supply of crude oil or refined petroleum products, changes in the market price of petroleum, including the volatility of spot pricing, increased levels of competition, compliance or lack of compliance with various environmental and other applicable laws and regulations, our ability to collect accounts receivable, changes in the political, economic or regulatory conditions in the markets in which we operate, and the world in general, our failure to hedge certain financial risks associated with our business, our ability to maintain our current tax treatments and our failure to comply with restrictions in our credit agreements and other factors. Please see our filings with the Securities and Exchange Commission for a more complete discussion of these and other risks and uncertainties.

A copy of the Company’s interim unaudited consolidated financial statements along with this press release have been filed today with the U.S. Securities and Exchange Commission on Form 6-K and are available on the SEC’s website, www.sec.gov.

SOURCE Aegean Marine Petroleum Network Inc.