The Gory Details on Aegean Marine Petroleum Network's Double Miss

Aegean Marine Petroleum Network (NYSE: ANW  ) reported earnings on May 15. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q1), Aegean Marine Petroleum Network missed estimates on revenues and missed estimates on earnings per share.

Compared to the prior-year quarter, revenue dropped. Non-GAAP earnings per share didn't move. GAAP earnings per share increased.

Margins expanded across the board.

Revenue details
Aegean Marine Petroleum Network reported revenue of $1.57 billion. The three analysts polled by S&P Capital IQ predicted revenue of $1.74 billion on the same basis. GAAP reported sales were 13% lower than the prior-year quarter's $1.81 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.13. The six earnings estimates compiled by S&P Capital IQ anticipated $0.14 per share. Non-GAAP EPS of $0.13 were the same as the prior-year quarter. GAAP EPS of $0.15 for Q1 were 15% higher than the prior-year quarter's $0.13 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 4.5%, 30 basis points better than the prior-year quarter. Operating margin was 0.8%, 10 basis points better than the prior-year quarter. Net margin was 0.5%, 20 basis points better than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $1.74 billion. On the bottom line, the average EPS estimate is $0.20.

Next year's average estimate for revenue is $6.88 billion. The average EPS estimate is $0.62.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 555 members out of 575 rating the stock outperform, and 20 members rating it underperform. Among 78 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 70 give Aegean Marine Petroleum Network a green thumbs-up, and eight give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Aegean Marine Petroleum Network is buy, with an average price target of $9.55.

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  • Report this Comment On May 16, 2013, at 5:37 PM, JeffA25 wrote:

    This article misses the reason that ANW stock soared today. It was the conference call. During the call the following was discussed:

    1. April volumes (in tons delivered) were 11% higher than the rate of the first quarter on average. The CEO said that additional sales of this sort do not result in any expenses other than the cost of the product itself. In other words, nearly the entire spread between COGS and Revenue goes to the bottom line (other than taxes, obviously).

    2. They also said that they expect sales volumes to pick up moving forward based upon the trends that they are seeing now.

    3. They noted that their new global credit facility will result in a savings of interest costs of about 50 basis points. (That is just under half a million dollars per quarter.) Since net income for the first quarter was 6.3 million dollars, this is material.

    4. They said that they could easily double their volumes, but that they limit their customers in order to insure credit worthiness in the current environment. If the shipping industry improves, the volume will soar.

    5. They said that they will be opening a new port this summer. They also reported that they had just opened Barcelona. In that port, there is just one other competitor. The market in Barcelona is between 1.2 and 1.5 million tons per year. If ANW gets 25%, that will add 75,000 tons per quarter or 25,000 per month. The April figure was 875,000 tons, so again, Barcelona may make a significant contribution to the bottom line.

    6. They are going to sell two old ships. This will not affect the volume of deliveries, but it will drive down operating costs. Expectation is that it will reduce annual operating costs by about 4 million dollars.

    Translate all this into a forecast – which they did not do – and the future looks bright. It is no wonder that the stock soared. These are hardly "gory details".

  • Report this Comment On May 16, 2013, at 6:24 PM, phoenixsuns2424 wrote:

    Bravo JeffA25! Seth here couldn't analyze anything deep enough to discover what day comes after Sunday. He has a series of flat out terrible reports on ANW with claims like their inventory will need to be marked down because he watches the dollar amount rise with oil prices on the balance sheet and never addresses unit inventory. He has continually missed that ANW sells bunker fuel, it doesn't rot like fruit or go out of style like clothes to need a mark-down. He has never acknowledged any part of ANW's business model such as their inventory turns every 10 days and is presold before they buy it. Hardly something that needs to be marked down. Because they sell bunker fuel - revenues, receivables, cost of goods sold, inventories, and payables all move up or down on oil prices. He has never once realized that volumes and the spread per ton are the important metrics here. If he did, his work would notice that profit spreads jumped considerably this quarter and the company made almost the same money in gross profit as 4Q despite lower volumes sold. Because oil moves up and down, if he had a clue, he'd realize that impacts revenues and margins. If they sell a ton of fuel for $800 and make $25 on that ton the margin is 3.1%. If that same ton of fuel is sold for only $600 because oil prices fell, ANW still makes $25 on that ton, but magically the margin becomes 4.2%. He has zero idea how this works and has never even read the business strategy to understand the operating model. Lower fuel prices = lower revenue but higher margins. Which is what he points out here, but has no idea why and misses that it does not matter. Every quarter, out comes another bit of woeful ignorance from Seth about the results. He has yet to acknowledge that ANW has cut a huge amount of fixed costs, that it has an operating advantage over the bulk of its competitors, that the company has not had a bad quarter since 3Q10 and results have shown steady improvement. Adding the current run rate of volumes adds about 7-cents to next quarter's EPS. The lower interest you talk about adds another cent to quarterly EPS too. This business has huge operating leverage because the bulk of costs are fixed so adding volumes becomes higher earnings instantly. Seth will never bother learning that, but he will be out with a note on what revenues were after 2Q results are announced.

  • Report this Comment On May 17, 2013, at 4:08 PM, ghbade wrote:

    Gentlemen,

    I've read the original article, as well as comments. Having very little background in finance I can neither comment on the numbers, nor take sides. My overly simplified position is this. I just made really nice profit, and as of this minute, I still can't complain...

    Why did this sector have such a run up yesterday?

    Any thoughts on Navios being in "hot water"?

    ghbade

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