Aegean Marine Petroleum Network (ANW) Q1 2014 Results - Earnings Call Transcript

May.22.14 | About: Aegean Marine (ANW)

Aegean Marine Petroleum Network Inc. (NYSE:ANW)

Q1 2014 Earnings Conference Call

May 22, 2014, 08:30 AM ET

Executives

Spyros Gianniotis - Chief Financial Officer

Peter Georgiopoulos - Chairman

Nikolas Tavlarios - President

Analysts

Doug Mavrinac - Jefferies

Ben Nolan - Stifel

Kevin Sterling - BB&T Capital Markets

Omar Nokta - Global Hunter Securities

Operator

Good morning, and welcome to the Aegean Marine Petroleum Network Inc. first quarter 2014 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 the 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 at www.ampni.com. We will conduct a question-and-answer session after the opening remarks, 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 2998855.

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

Spyros Gianniotis

Thank you and welcome to Aegean Marine's first quarter 2014 conference call. On the call today is Peter Georgiopoulos, Chairman of Aegean; as well as Nick Tavlarios, President of Aegean.

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 and the 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, our 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 reports and filings with the Securities and Exchange Commission.

I would now like to turn the call over to Nick Tavlarios, President of Aegean to discuss highlights for the quarter.

Nikolas Tavlarios

Thank you, Spyros, and thanks to all of you for joining us. I'd like to begin with an overview of our achievements during the first quarter, drivers of our operational and financial results, and how recent and upcoming achievements demonstrate the continued strengthening of our business model and our ability to successfully execute.

After that, I will then turn the call over to Spyros to discuss our financial results for the quarter. Following Spyros remarks, I'll discuss our thoughts on the macro environment.

Throughout the first quarter, we continue to build upon the momentum we've established across our business. We position Aegean to benefit from the strength of our business model, despite the continued challenging operating environment.

Importantly, Q1 marked our 13th consecutive quarter of profitability, which means that we have achieved profitability in 28 of 29 quarters since becoming a public company. It is important to note that we achieved this profitability, while our industry faced a protracted recession.

Our success has created a strong foundation for growth and we expect to capitalize further as the markets begin to improve. Our unique business model has allowed Aegean to leverage its asset base and infrastructure to opportunistically capture additional voyage and storage revenue opportunities, as they materialize and drive profitability. I want to underscore that we selectively approach each opportunity as we are most concerned with pursuing the most profitable business.

While the maritime industry has faced tremendous headwinds over the past five years, stronger they have been in some time, Aegean has continued to drive. We established sustainable internal growth drivers, including Aegean's U.S. East Coast business, and the expected introduction of our new storage facilities in Fujairah in the second half of 2014. We are confident that even without macro improvement we will be well-positioned to continue to create shareholder value.

I'll talk more about industry outlook later, but I want to note that, should we see strong market improvement, we are positioned to see incremental benefits in our financial results. Throughout the first quarter we refined our operating infrastructure, dynamically respond to the real time ebbs and flows of current and future demand.

Part of our strategy includes opportunistic sales in non-core vessel, which brought in cash proceeds and reduced our expense structure during the quarter. Additionally, the sale of non-core vessels will have no impact on our ability to sell more fuel as the markets turns.

Last quarter, I indicated that we will target selling three vessels in 2014. To date, we have sold two vessels and are now in the final stages of selling the third. We have further identified two additional vessel sales that we hope to execute on in the near-term. These actions are targeted to streamline our expense structure and improve the agility of our infrastructure.

The sales of older non-core vessels also allow us to over time increase utilization of remaining fleet and reduce maintenance CapEx. Rationalize our expenses by selling older non-core vessels will remain a key part of our operating strategy for the foreseeable future.

In the first quarter, we continue to identify opportunities to increase efficiencies and drive profitability, as capacity came out of the market. This strategy continues to deliver results, despite the increase of the competitive markets.

Similar to quarters past, we capitalized on significant built-in fleet capacity and took advantage of comparable economies of scale, successfully leveraging our fixed cost to drive improvement on the bottomline. We have built strong foundation for profitable growth and we expect to continue on our positive trajectory.

The targeted geographic expansion of our integrated marine fuel logistics chain remains a key consideration for Aegean. Diversifying our geographic presence and expanding our revenue base is an important means of increasing our long-term earnings power. We remain focused on identifying new locations that align with our strategy to pursue profitable growth and believe there are possibilities for Aegean in several geographies.

In Fujairah, we expect to commence commercial operations at our storage facility in the second half of the year, and anticipate that the facility will begin to meaningfully contribute to EBITDA, storage fees and volumes in the second half of 2014. We are excited to capitalize on emerging opportunities in the region.

Additionally, our new facility in Barcelona and operations at the Port of Algeciras Bay continue to conserve into our growth, and allow Aegean to participate in the compelling Mediterranean market. In our U.S. operations, the assets we acquired from the Hess Corporation, U.S. East Coast bunkering business in December 2013, have been fully integrated into Aegean's U.S. East Coast operation.

We are pleased with the performance of these assets, and believe they will continue to significantly contribute to both our growth and earnings. Our entry into lubricants business has proved beneficial, as it continues to diversify our revenue stream.

For the first quarter, we announced lubricant volumes of 5,213 metric tons. This is a smaller lower-volume business for Aegean, but it continues to yield higher operating margins. We are confident that expanding volumes in lubricants business will continue to be a driver of additional revenue diversification going forward.

With that, I'll turn the call back over to Spyros to provide more details about our financial results for the quarter.

Spyros Gianniotis

Thank you, Nick. As market conditions fluctuate at ports around the world, we provide sequential comparisons in our discussion of quarterly financial results, by comparing the results for the first quarter of 2014 to the ones off of the fourth quarter of 2013.

Turning to Slide 8. For the first quarter of 2014, our sales volumes increased 13.5% to approximately 2.7 million metric tons on a sequential basis. During the first quarter, the gross spread per metric ton of marine fuel sold was $26.7 per metric ton and remained consistent with Q4 levels.

Total gross profit for the first quarter increased by 10.6% sequentially to $82.9 million. Net income for the first quarter was approximately $5.1 million or $0.11 per basic and diluted share. EBITDA for the first quarter was $23.5 million or $27 million adjusted for the sale of non-core vessel.

During the first quarter, sales volumes continue to be affected by the challenging macroeconomic and marine industry landscapes, and it is important to note that under normalized market conditions, volumes would have been much higher. Additionally, with Aegean, while Aegean has the ability to capture more volume, we chose to pursue only the most profitable business streams.

Slide 9 illustrates our company-wide utilization, which is measured as volumes delivered per vessel per day, excluding both scheduled and non-scheduled non-operating days. In the first quarter, utilization was 474.5 metric tons per day compared to 478.3 metric tons per vessel per day in the fourth quarter of 2013.

Utilization decreased in the first quarter, as sales volumes in markets where we operate ocean-going vessels decreased slightly quarter-on-quarter. As a reminder, our utilization does not include Aegean Northwestern Europe, which operates as spot-based business model focused on providing same day sales and delivery services and our U.S. East Coast business, where we do not own delivery assets.

Our decision to reduce volumes in specific markets is aligned with our strategy to drive profitable volume growth. In other words, we will not sacrifice healthy margins to grow volumes in order to expand our topline. Our corporate objective is to achieve the best possible spread and volumes, while generating profits. With 28 consecutive quarters of profitability, we have a strong track record of doing just that.

We generated voyage revenues of $8.7 million in the first quarter, a 10.1% increase over the previous quarter. Looking ahead, we expect voyage revenues to remain consistent, as we continue to leverage our built-in idle fleet capacity and charter excess tonnage. We expect storage levels to remain consistent for the current quarter and increase thereafter, as our Fujairah facility comes online and we lease storage capacity to third parties.

On Slide 10, we present our historical gross profit and EBITDA margin trends. Our EBITDA margin, which is calculated as adjusted EBITDA divided by gross profit, was 32.6% in Q1, an increase of 6.9% over the previous quarter. This was largely driven by our ability to drive down expenses and improved gross spread per metric ton.

During the quarter, Aegean reported net cash used in operating activities of $32.5 million, which is mainly due to build up of receivables in the acquired business in U.S. East Coast. Going forward, we expect our customer vessel cycle to remain in line with new levels.

As of March 31, 2014, our cash position was $150 million and our working capital position totaled $279.9 million. We are pleased with our significant financial flexibility, which continues to be a key differentiator for Aegean. We have $533 million remaining on our total revolving bank borrowing credit capacity through our global multicurrency credit facility and our ABN AMRO Capital New York facility.

The support from various banking institutions underscores their belief that Aegean is poised for significant growth and expansion around the world. We look forward to taking advantage of this credit to expand the Aegean brand as identified means for profitable growth.

In reviewing our balance sheet, on Slide 12, it is important to note that, while trade finance debt at the end of Q1 totaled $623 million due to intensive working capital requirements inherent in the global marine fuel supply industry, this debt figure has a rapid turnover of between 30 to 45 days. This trade finance debt could be paid in full, along with our entire trade payables as well as majority of our vessel debt based solely on the liquidation of our current assets.

The remaining debt on our books will be the fixed asset debt of approximately $135.7 million, which is secured by 36 junk vessels or $3.8 million of debt per vessel. As a result, we will end up with unencumbered debt-free assets that include 18 owned bunkering vessels, three floating storage facilities and two existing onshore storage facilities.

As of March 31, 2014, our fixed asset debt-to-adjusted EBITDA was approximately 2.9x. Our substantial financial liquidity, including over $1.8 billion in working capital credit facilities, including supplier credit, provides Aegean with a distinct competitive advantage, as we seek to further expand our global market share and strengthen our industry leadership for the benefit of the company and shareholders. We are in compliance with all covenants and have a strong fixed asset debt-to-adjusted EBITDA ratio.

Now, I will turn the call back over to Nick. Nick?

Nikolas Tavlarios

Our first quarter results and financial position demonstrate how Aegean is driving growth and creating shareholder value, despite persistent industry headwinds.

I would now like to provide some thoughts on the emerging macro trends in our industry, and why we believe we are very well-positioned to continue to successfully navigate challenges, and benefit from potential positive shifts in the market landscape.

As I mentioned before, we are beginning to see green shoots at the outset of Q1, we saw a nice rebound in volumes, but at the quarter's midpoint, we saw some volume decline. Despite the persistent challenges, Aegean's business model has proved to be immune to market fluctuations and is built to capitalize.

We do expect to see the fundamentals in the maritime industry gradually improved over time. If this expectation plays out, we would expect to see our financial results gradually accelerate throughout the year.

Again, regardless of an improvement to our operating environment, we are executing a strategy that will allow Aegean to be successful and deliver strong financial result to our shareholders with or without macro improvements. We are excited about our path forward and opportunities to build significant shareholder value.

We are confident that there are several milestones on the horizon that will demonstrate our continued progress. This includes the opening of our Fujairah storage facility, our ongoing program to streamline expenses and the possibility of opening new ports that will increase the utilization of our assets. We believe we are executing a strategy that is allowing us to prevail, despite persistent industry headwinds, and is positioning Aegean to outperform the market as it recovers.

With that, I would like to open the call for questions. Operator?

Question-and-Answer Session

Operator

(Operator Instructions) And our first caller is Doug Mavrinac from Jefferies.

Doug Mavrinac - Jefferies

Congratulations on a very good quarter. I mean it looks like the plan is really coming together nicely here. Looking at the first quarter, and that's pertaining to the question that we have on it, the gross spread obviously remained strong and you guys mentioned how sales volumes were rebound and increasing, et cetera. My question is was there a specific reaching a market that you saw that was responsible for the increase in 1Q sales volumes relative to the previous quarters?

Nikolas Tavlarios

I think the important thing to note here, Doug, is we just in general or the product mix is beginning to change. Our portfolio effect is taking place. So we're moving out from where we sold predominantly high sulfur fuel oil to adding in more low sulfur fuel oil and more distillate gas oil.

And again, this is going to really take effect in 2015, where anything that was really low sulfur fuel oil become distillate, and that is a very positive driver on our profitability. So that is beginning to take effect, you're feeling and you're seeing more places around the world.

And then other than that, I think we just had generally good performance across the business. And our U.S. East Coast business did very well too, so all those contributed to a very, very good gross spread. And yes, that figure that you're seeing of $26 includes the U.S. East Coast business.

Doug Mavrinac - Jefferies

So when we here about kind of how things are progressing, I mean you mentioned in the middle part of the quarter things kind of softened, but obviously they still remain robust and now you're at 2.7 million tons of sales. And I'm sorry if I missed this, but how is the second quarter progressing in terms of, normally you guys provide, saying, hey, for the month of April, this is how many sales volumes we did. Can you provide that up? And once again, I'm sorry if I missed it?

Nikolas Tavlarios

Sure. No, you didn't miss it. I think we didn't include it, but the answer is it's running at around the same rate. I would just say, it's just shy of a 900,000, but we have pretty good confidence that it's going to be around the same rates just around this quarter.

Doug Mavrinac - Jefferies

And it seems like it's kind of on track with what we saw during 1Q, the product mix, the geography mix, it's probably fairly consistence with what we have been seeing?

Nikolas Tavlarios

That's right.

Doug Mavrinac - Jefferies

And then just final question. This is more not market-related, but just strategic, I mean you guys have been very busy, and you've got Fujairah coming up, you've integrated Hess, you've been selling off older non-core assets. I guess my question is from a strategic standpoint that, I mean what do you envision maybe then rest of this year focusing your time on? I mean is it going to be kind of harvesting the opportunities you guys have been pursuing or maybe pursuing new things? I mean what excites you about the second half when you see it in terms of continuing to implement and improve the model?

Nikolas Tavlarios

Well, as we pointed out here we have a big portfolio. And what we think that, we think there is more efficiency here on both lines, both the top-end and on the expense line too. So this expense line, we have a pretty clear strategy and we think that's obviously going to be contribute to it. We're just about ready to complete our milestone and then probably surpass it.

Beyond that, the storage facility Fujairah has an enormous piece of business and it's going to -- right now, we operate with a floating storage vessel in that market, which will limit how much we can sell there, and a very strong market with strong demand, and I think we can do much more there. So we're excited about what that brings in.

We do see some other parts of the world where there are opportunities for us too, so it's unlikely that we can do something there. But when we announced the Aegean USA business, formerly Hess, and I think Peter, and I'm speaking for you Peter, but in that last call, he said that it is something that is scalable and that there could be some synergies that come out of that and we definitely believe that. So we think that it's a matter of, again not just integrating to the company, but again now trying to extract even further value out of that business and we know we'll do that and feel the fruits of it.

Operator

And our next question comes from Ben Nolan from Stifel.

Ben Nolan - Stifel

I did want to say, it seems like just sort of backing into the numbers that the U.S. business is often running pretty well here and that sort of leads into my first question. It's a little bit different business model, an asset-light business model for you guys, although there clearly is a pretty healthy leased business with the various storage facilities that you guys have and the connections to the Colonial pipeline.

As we move closer to the implementation of Marpol Annex VI and low sulfur fuel, can you maybe help me understand what sort of impact that would have on you guys more broadly speaking and specifically as it relates to your U.S. business and perhaps the ability to blend fuel in the U.S. market.

Nikolas Tavlarios

Well, then anything say that's sold in the U.S. market that is low sulfur, let's say, that's 20% or 25% of your mix, right, that's going to become a 0.1% distillate product after January 1, 2015, and that product is definitely more profitable, and so it stands to reason that that this will be a positive driver on that businesses, profitability, and that also takes effect in the Mediterranean too.

So we will be feeling this in the various parts around the world in a very positive way for our company. And the mere fact that we have, tankage infrastructure in these, in all our U.S. ports that we -- and this is part of the strategic move in securing that tankage, it puts in a position to be able to blend, opportunistically buy and take advantage of this. So you're already seeing it, but you will see it in a stronger way, come January 1. And that's the growth driver.

Ben Nolan - Stifel

And that sort of along with that, we've heard a lot of noise that there being potential shortage of low sulfur fuel, as the regulation is implemented and the possibility of fuel prices really escalating. Is that similar to what you guys are seeing as well? I mean could you see that playing out and then how would an escalation in prices impact your business?

Nikolas Tavlarios

There is definitely the potential for -- again, part of the reason, have tankage, you know, that you can buy from various parts of the world and take care of those, address the shortages proactively. The low sulfur fuel shortage has existed before, so we'll probably see that too. And we think that what you understand that distillate price to be today will be higher than it is today.

And what that means for Aegean is it has to have sufficient liquidity. Again, we're ahead of the curve on that to be able to deal with that. I think it puts a competitor, who is not in that position and hasn't gone out and taken these steps, in a difficult place. And so that puts us in a place where we can capture share and capture profitability.

Peter Georgiopoulos

This is Peter, just to jump in to what mix that, I mean to answer what or to address what you said, yes, potentially there can be shortages and potentially there will be significant price increases. That being said, we feel that everything we've been doing, and if you look at Aegean has been doing, setting up storage in strategic locations around the world, we have this huge credit facilities, so if there are price rises, we'll be able to handle that, because we have the credit facility to take on higher price fuel and we have the storage facilities around the world, so that we won't get caught short and we'll be able to supply our customers for some of our competitors.

Ben Nolan - Stifel

I was just going to say that that's helpful, and at least in my opinion, I think you guys are in a good position, both from liquidity and the ability to blend into a cheaper product. But my next question has to do with the Fujairah facility. I know that you guys have said it's a second half, and is there any way that you could just maybe make that a bit more granular? Are we talking about 3Q, beginning of 3Q or just that some point in the second half?

Nikolas Tavlarios

I'm sorry, could you just?

Peter Georgiopoulos

When in the third quarter do you think or in the second half do you think Fujairah come into play?

Nikolas Tavlarios

I do think in the early part of the second half.

Peter Georgiopoulos

I mean, right now we're just getting all -- its done being built, we're just getting a lot of approvals and then testing like a systems and it's getting commissions. So that shouldn't take very long and then we think in the third quarter we'll get going.

Ben Nolan - Stifel

So have you begun the process of leasing out any of that capacity or is that something that takes place after its fully commissioned and up and running.

Nikolas Tavlarios

The commission includes a period of time when we left our product in there. As they go through getting inspections, and then get approvals, that's what Peter was just speaking of, so that customers then are comfortable with placing their product there. Nothing has changed at this point on our prior view and timeline on that. So we're still in line.

Operator

And next we will hear from Kevin Sterling from BB&T Capital Markets.

Kevin Sterling - BB&T Capital Markets

Nick, let me follow-up with Ben's question about Fujairah, it's coming along in the second half of this year. Can you help us to, how should we think about the profitability of the storage facility? And maybe along those lines what are going to be the biggest drivers of that, the greater buying power of fuel, the leasing of excess storage, how should we kind of think about some of those key drivers for profitability of that facility?

Nikolas Tavlarios

Well, there is really a few, some very powerful and compelling reasons to have this investment. One is our ability to sell more volume through our own platform. Two, it's not just to sell ordinary back-to-back spec fuel oil, we can actually get in a position where we can do some blending, much like we do here in the East Coast and capture and use that infrastructure to your advantage, so that you can make more profit. So that's the second thing. And the third is to lease the capacity out to the third parities who require it. So those would be the reasons.

And so far as what we think that means for 2014, in terms of its contribution, I think we have talked about a full year contribution of about $15 million in EBITDA and now it's half a year. So it's going to be less than $15 million. But we expect that number to even be improved. We want to make sure we're somewhat conservative about what we say here. So that's the way our thinking goes. Is that helpful?

Kevin Sterling - BB&T Capital Markets

It is. And obviously, it sounds like you guys are having such success here on the East Coast with the Hess acquisition. It does sound like almost replicating a portion of that model in Fujairah, where you just have more flexibility, is that fair?

Peter Georgiopoulos

Yes. That's entirely correct.

Kevin Sterling - BB&T Capital Markets

And you guys, you've been selling some non-core assets, improving your expenses, and I think I heard you say, Nick, you guys are selling three more non-core assets. My question is outside of those three, are there any more that you've identified that you need to sell maybe the rest of this year?

Nikolas Tavlarios

Kevin, it would be -- let's just say, that we've sell two to date. We were in contract on another, right. And there is definitely the potential for two more bunkering tankers and one floating storage vessel.

Peter Georgiopoulos

As Fujairah comes on.

Nikolas Tavlarios

That's right. That would go.

Peter Georgiopoulos

We would sell the floating storage there.

Kevin Sterling - BB&T Capital Markets

And I think Doug asked a question kind of on expansion opportunities on the horizon, as you sell assets and also expand other ports, do you need more vessels or could you maybe shift a vessel around and not necessarily have to grow your fleet and then continue to improve utilization?

Peter Georgiopoulos

Yes, we will not need more vessels. We can definitely shift vessels around. Also, don't forget we've got a number of vessels on charter that we could, once those charters expire we could move to other locations. And I think about that, it only helps all our utilization as you pointed out.

Kevin Sterling - BB&T Capital Markets

And then last question for me, it looks like your working capital was a little high this quarter. Was there anything unusual going on this quarter, and maybe this is related to Hess, and how should we think about working capital going forward?

Spyros Gianniotis

Yes. It will stay at the levels you see today, Kevin. Yes, the answer is, as we said, it has to do with the U.S. acquisition.

Kevin Sterling - BB&T Capital Markets

So it's mainly kind of what we saw mainly related to Hess, is that right?

Spyros Gianniotis

Correct.

Operator

Our next question comes from Omar Nokta from Global Hunter Securities.

Omar Nokta - Global Hunter Securities

I know you've been talking about Fujairah a bit. I just wanted to get some clarity, Nick. You guys have previously talked about the $15 million EBITDA number, and when you said that just now, did you mean that $15 million would be via the third-party storage or would that be everything encompassing, being able to do blending and sales?

Spyros Gianniotis

Omar, these will be the storage revenue. In other worlds, not the bunkering revenues or any volume increases, proceed from volume increase or anything else. That's throughput from the storage.

Omar Nokta - Global Hunter Securities

And then just I know you guys didn't break it out, but would you be able to give us a breakout of what's have contributed volumes-wise versus the traditional Aegean business?

Nikolas Tavlarios

No. We don't really like to get ports-specific or center-specific. So just in general, they've done a very, very good job. They've quite well. And again, they've executed very much how we hoped they would have.

Omar Nokta - Global Hunter Securities

So just trying to think about how the main business did. Obviously, Hess has come along very nicely. And if I try to think about it maybe on a same-store sales basis that you guys have done prior to Hess, you were in that mid-20s spread range. Is that sort of implied based on current results that maybe the rest of the network did over 30 for the quarter?

Nikolas Tavlarios

I would just say that, just in general, the network, definitely, it had a high-26 level last quarter. It continues to select profitable business and not necessarily just volume per se, and that's what it did. And the same applies to our U.S. East Coast business. We again, selected profitable business and not just volumes. And that's really the strategy that's in place right now until these headwinds expire and then we can go pursue profitable volume.

Omar Nokta - Global Hunter Securities

So I was just trying to just think it in the context of, it has been so asset like that theoretically the spread would be much lower that you guys were able to maintain such a very highly on that $26.70 level. And so I'm just thinking, it seems to me, at least, that it jumps off that the main business must have been in the 30s. And I know you don't want to maybe get specific, but should I come away thinking maybe that what you did sell in the traditional business was a much more profitable than, let's say, the prior quarter?

Nikolas Tavlarios

Well, Omar, the reason we don't give you clear, clear answers here, just for commercial reasons, obviously. It has nothing to do with not wanting to share anything with you, but it's driven by commercial purposes here. So please don't think or don't feel I want to answer.

Omar Nokta - Global Hunter Securities

No.

Nikolas Tavlarios

Our whole group executed, that's really is.

Omar Nokta - Global Hunter Securities

I also just wanted to just ask, Spyros, in your commentary early on in the introduction you had mentioned that your volumes were here and that in the normalized environment they would have been much higher. And I know you guys have talked about this quite often in the past, but could you sort of maybe just qualify, what you mean by that?

What a normalized environment would be? Obviously, things have been fairly weak or you guys have quoted in, persistent industry headwinds. Can you just maybe give us a sense of what you see when you think about things normalizing? What would be different in a normalized environment versus what we're seeing now?

Nikolas Tavlarios

So what would be different? I mean, here is one of the headwinds we're facing. In a strong environment, ship owners want to go as fast as possible and don't want to waste time. So what they'll do is, when they load bunkers, like with your car, they'll fill it out, right. So when one of our bunkering ships has to go out and deliver bunkers, that bunkering operation which takes several hours, whether you're delivering a 100 tons or a 1,000 tons, they will go and they will sort of fill up the car.

What's happening in today's environment is, ship owners because of tight working capital, and I know people feel the market is turning around and it is turning around, still peoples' cash reserves are low and working capital tight, owners aren't filling it up. They're saying, I need 100 tons to get from point A to point B, give me the 100 tons.

That 100 ton still takes our bunkering vessel several hours to deliver, because they've got to go, they've got to pick up the fuel from the storage, they've got to go out to the see. They've got to tie-up along side the ship taking the fuel. They've got to pump it. It's got to be checked. They disengage and they go back. That whole operation takes several hours, whether it's 100 tons or 1,000 tons.

So we're seeing a more normalize environment, an environment where owners aren't stretched on working capital. We're not worried about their credit, and that the owners are -- the market is strong, so they just want to move. And so since they want to move it, they don't want to stop and get bunkers for every 100 tons. But in a lousy environment, when you don't have the working capital, you'll do that.

So we can start delivering larger stems. We believe as the market improves and people start feeling more confident about their working capital and their cash, that's when we think you'll start seeing bigger deliveries and higher utilization in our ships. And the combination of getting rid of the older stuff and delivering larger stems, we could see our utilization in every dollar that goes right to the bottomline, because we don't need anymore infrastructure, improve considerably.

Omar Nokta - Global Hunter Securities

And just one final one, there has been -- I just wanted to ask about the whole LNG bunkering business, it's obviously very, very, very minute piece of the overall pie currently, but there has been increasing chatter about that and then several companies trying to get into that business. Is that something that appears to you guys on the horizon, is that something you're considering?

Peter Georgiopoulos

Look, it's something that we're definitely looking at. I think it's a ways off. The issue is where it gets done. In other words, if you think we're going to have a shortage of low sulfur bunkering fuel next year, I can only tell you how many fewer places have LNG fuel. So I think it's a matter of understanding the market, where you can have stations, where there is fuel, having the type of ships that can deliver it. I mean, I know people are talking about it. I think it's a much bigger deal than people are letting on, let's put it that way. And when I say a bigger deal, I mean it's very complicated.

Operator

And we have no more further questions in the queue.

Nikolas Tavlarios

Thank you.

Operator

And that concludes today's call. Thank you for your participation.

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Aegean Marine Petroleum Network (ANW): Q1 EPS of $0.18 misses by $0.02. Revenue of $1.69B (+7.6% Y/Y) misses by $40M.