Dry Bulk Market’s Third Quarter Rebound, Boosts Pioneer Marine’s Financial Results
Pioneer Marine Inc. and its subsidiaries, a leading shipowner and global drybulk handysize transportation service provider announced its financial and operating results for the quarter ended September 30, 2019.
Torben Janholt, Chief Executive Officer commented: “After a challenging first half of 2019 the drybulk markets bounced back in the third quarter of the year mainly led by improvements in the Capesize sector. The positive sentiment affected smaller sizes as well, and with an increase in minor bulk trades our handysize vessels benefited well. Pioneer achieved a net profit of $3 million and an EBITDA of $6.7 million.
“Now, with seven modern handysize vessels under commercial management, Pioneer operates a handysize fleet of 25 vessels, well positioned in the market to service our clients. Ongoing cost control as well as effective operation of our vessels contributes to the positive bottom line. A ballast water treatment system was successfully installed on the M/V Emerald Bay whilst the vessel was at sea, a good example of our technical department’s innovation and skills.
“Well into the fourth quarter we can look forward to yet another year with positive results.”
Liquidity & Capital Resources:
As of September 30, 2019, the Company had a total liquidity of $30.8 million including $11 million in restricted cash.
The Company’s plan is to proceed with the installation of Ballast Water Treatment System (‘BWTS’) on two vessels of the fleet within Q4 2019 and on the remaining fleet vessels up to early 2023. To date, there are three vessels out of the current fleet which have been already fitted with BWTS.
*For reconciliation and definition of Adjusted EBITDA refer to “Summary of Operating Data (unaudited)” section within this press release.
On October 28th, 2019, the Company successfully completed the installation of the Ballast Water Treatment System on the M/V Emerald Bay. The project was managed by in-house technical personnel and was carried out while the vessel was en route without disrupting vessel’s operations.
On October 24th, 2019, the Company entered into a Memorandum of agreement (“MoA”) for the sale of M/V Fortune Bay (2006 built 28,671dwt) to an unrelated third party on a charter free basis. The vessel is expected to be delivered to her new owners within the first quarter of 2020.
On September 18th, 2019, the Company repurchased a total of 250,614 of company’s shares at a discounted price per share compared to the Company’s Net Asset Value, increasing the treasury shares held by the company to a total of 4,867,832 shares.
Financial Review: Three months ended September 30,2019
Net Income for the three-month period ended September 2019 increased by 602% and amounted to $3.0 million as compared to $0.6 million loss for the respective previous year period. The increase is partly attributable to the efficient monitoring of Company’s running expenses as well as to the reduced drydock expenses. Furthermore, net income for 2018 was affected by the loss on debt extinguishment in the amount of $0.5 million.
Adjusted EBITDA totalled $6.7 million for the third quarter 2019, increased by $0.9 million as compared to the third quarter of 2018 mainly due to improved operating and general administrative expenses.
TCE rate of $8,900 for the third quarter of 2019 slightly decreased by 1.2% compared to TCE rate of the same period in 2018.
A decrease of 6% on daily vessel OPEX, which were reduced to $4,242 per day for the three months ended September 30, 2019 compared to $4,503 during the same period in 2018 contributed positively to Company’s good performance for this three-month period.
Daily G&A rate decreased by 25% to $557 per day as compared to $738 per day for same period in 2018. This is attributable to one-off items incurred in the three months ended September 30, 2018 in the amount of $0.5 million, while no such one-off item affected the respective period of 2019. G&A per day basis commercial days is further reduced by 35% to $480 per day.
During the third quarter of 2019, none of the vessels of our fleet had to perform a Class intermediate survey while during the same period of the prior year three vessels had their special survey with a total cost of $1.9 million.
Depreciation cost decreased by $0.1 million in comparison to the same period in 2018 due to the reduced average number of vessels.
Interest and finance cost of $1.3 million was decreased by 19% due to reduced Libor rates as well as reduced loan balances.
Financial Review: Nine months ended September 30,2019
Net Income for the nine-month period ended September 30, 2019 increased by 276% and amounted to $6.7 million as compared to $1.8 million for the same previous year period. The increase is partly attributable to the gain on sale of M/V Paradise Bay of $3.9 million as well as efficient cost monitoring of Company’s running expenses combined with the above market indices performance achieved in terms of TCE per day. Furthermore, net income for 2018 was affected by the loss on debt extinguishment in the amount of $1.3 million.
Adjusted EBITDA totalled $15.2 million for the nine-month period ended September 30, 2019, decreased by $1.0 million as compared to nine-month period ended September 30, 2018 mainly due to lower TCE rate.
TCE rate per day of $7,940 for the nine-month period of 2019, is decreased by 13% compared to TCE rate of the same period in 2018. This is attributable to the weak market conditions during the first semester of 2019, which mainly affected the Company in the second quarter of 2019.
The Company continues to effectively monitor fleet operating expenses (“OPEX”). OPEX per day reduced by 8% to $4,281 per day for the nine months ended September 30, 2019 compared to $4,649 during the same period in 2018.
Daily G&A rate decreased by 23% to $503 per day as compared to $650 per day for same period in 2018. This is attributable to one off items incurred in the nine months ended September 30, 2018 in the amount of $0.7 million, while no such one-off item affected 2019. G&A per day basis commercial days is further reduced by 31% to $447.
As of September 30, 2019, two vessels completed their drydocks with a total cost of $1.0 million while during the same period prior year four vessels had their intermediate / special survey with a total cost of $2.1 million.
Depreciation cost amounts to $7.1 million increased by 9% due to fleet growth as Pioneer fleet consists of an average of 18 vessels, while during the same period in 2018 the Company owned on average 17 vessels.
Interest and finance cost slightly decreased by 5% when compared to the same period in 2018, from $4.6 million to $4.4 million, due to lower Libor rates and reduced loan balances.
Cash Flow Review: Nine months ended September 30, 2019
Cash and cash equivalent, including restricted cash increased by $4.0 million as at September 30, 2019 and amounted to $30.8 million as compared to $26.8 million as at December 31, 2018.
The increase is attributable to $11.6 million cash provided by operating activities, $9.4 million cash provided by investing activities, partially offset with $17.0 million cash used in financing activities.
Cash flow activities highlights during the nine-month period of 2019 mainly include, the loan repayments amounted to $11.7 million and the $2.6 million paid for repurchase of Company’s common stock. Sales proceeds from the sale of M/V Paradise Bay amounted $9.7 million and the Company also prepaid vessel’s loan in the amount of $2.5 million.Full Report
Source: Pioneer Marine Inc.