Aegean Marine Petroleum Network's CEO Discusses Q2 2012 Results - Earnings Call Transcript

Aegan Marine Petroleum Network, Inc. (ANW)

Q2 2012 Earnings Call

August 14, 2012, 8:30 a.m. ET

Executives

E. Nikolas Tavlarios – President, Principal Executive Officer

Peter Georgiopoulos – Chairman of the Board

Spyro Gianniotis – CFO

Analysts

Douglas Mavrinac – Jefferies & Co.

Kevin Sterling – BB&T Capital Markets

Ben Nolan – Knight Capital

Chris Snyder – Sidoti & Co.

Peter Mann - Dougherty

Peter Imber – North Point Partners

Presentation

Operator

Operator

Good morning, and welcome to the Aegean Marine Petroleum Network, Incorporated second quarter 2012 conference call and presentation. I would like to advise everyone that there will be a slide presentation accompanying today’s conference call. That presentation can be obtained from Aegean’s website at www.ampni.com. I also want to inform everyone that today’s conference is being recorded and is now being webcast at the company’s website www.ampni.com. We will conduct a question and answer session after the opening remarks and instructions will follow at that time. A replay of the conference will be accessible through the next two weeks by dialing 888-203-1112 for U.S. callers and 719-457-0820 for those outside the U.S. To access the replay, please enter the pass code 6300415.

At this time, I would like to turn the conference over to the company. Please go ahead.

E. Nikolas Tavlarios

Thank you, and welcome to Aegean Marine’s second quarter 2012 conference call. My name is Nick Tavlarios, Aegean’s President. With me today are Peter Georgiopoulos, Chairman of Aegean, and Spyro Gianniotis, Aegean’s Chief Financial Officer.

Before we begin our presentation, I would like to note that this conference call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as expects, anticipates, intends, estimates, or similar expressions are intended to identify these forward-looking statements. These statements are based on Aegean Marine Petroleum Network Inc’s current plans and expectations and involve risks and uncertainties that could cause future activities by results of operations to be materially different from those set forth in the forward-looking statements.

Important factors that could cause actual results to differ include our future operating or financial results, the ability to manage growth adverse conditions in the marine field supply industries, and increased levels of competition.

For further information, please refer to Aegean Marine Petroleum Network, Inc’s report and filings with the Securities and Exchange Commission.

As outlined on page four of the presentation, I will provide our recent highlights. I will then review our financial results and Peter will review our company’s strategy. After that, we will open the floor to questions.

I will not turn the call over to Peter.

Peter Georgiopoulos

Thank you, Nick. During the second quarter, management continued to steadily enhance Aegean’s operational and financial performance in the challenging market environment. The cumulus success we have achieved executing our strategy outlined a year and a half ago has enable Aegean to significantly strengthen its’ work class integrated marine field logistics chain and deliver strong and sustainable results for shareholders.

We continue to markedly increase operating efficiencies to the sale of non-core assets. And maintain a diverse customer base with strong credit quality while strengthening the company’s future prospects. Specifically, we recently announced expansion plans in Barcelona providing an attractive opportunity to further leverage Aegean’s high quality of logistics infrastructure and increase utilization. With an expansive and more efficient global full service platform combined with a strong financial foundation, we remain well positioned to strengthen Aegean’s leading brand as an independent supply of marine fuel on a worldwide basis and expand the company’s future earnings power.

I will now begin my discussion on slide six with a presentation. During the three months ended June 30, 2012, sales volumes increased slightly to 2,714,176 metric tons.

While Nick will provide more details regarding our financial results, I’d like to note that based on the ongoing implementation of our strategy and the enhancing profitability combined with higher sales volumes, gross profit in Q2 was $80 million, an increase of 15% to the year earlier period. For the three months ended June 30, 2012, we reported adjusted operating income of $19.5 million and EBITDA of $21 million on an adjusted basis, which excludes a net non-cash loss from the sale of non-core vessels EBITDA for the second quarter was $25.2 million representing an increase of 34% from the year earlier period when there were no vessel sales.

The considerable growth in EBITDA demonstrates the inherent operating leverage in our integrated supply model. We increased EBITDA approximately 12% from $66 million in 2010 to $74 million in 2011. For the first half of 2012, we have already generated $43.5 million in EBITDA. And $47.7 million in adjusted EBITDA, which excludes the net non-cash effect of the sale of non-core vessels that we spoke about a moment ago. Based on management’s current projections, we intend to further expand annual EBITDA by approximately 20% to 25% over the next year.

Now further highlighting Aegean’s profitability and taking into account the non-core vessel sales, adjusted net income for the second quarter more than doubled to $6.9 million or $.15 basic and diluted earnings per share. We continue to expand our integrated marine fuel logistics chain in order to meet the strong demand for our comprehensive services and increase our long-term earnings potential.

During the second quarter, we completed our full funded new build program, a major milestone for our company. We also extended our global reach to mainland China by entering into a strategic alliance with one of the top supply companies in China.

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