Pioneer Marine Inc. “Beat” Average Dry Bulk Charter Rates

Pioneer Marine Inc. and its subsidiaries leading shipowner and global drybulk handysize transportation service provider announced its financial and operating results for the quarter ended March 31, 2019.

Torben Janholt, Chief Executive Officer commented: “First quarter results were satisfactory considering the otherwise testing period for the dry bulk market. The markets were weaker than expected due to many factors such as the US-China trade conflict, infrastructure disruptions in Brazil and heavy weather conditions in Australia.

Financial Highlights at a glance:

		First quarter		First Quarter
		2019		2018
Net income		$1.5 million		$1.3 million
Time Charter equivalent (“TCE”) revenue		$14.4 million		$12.8 million
Adjusted EBITDA*		$6.2 million		$4.6 million

“However, good chartering strategy with foresight saw our fleet covered for more than 65 per cent during this first quarter thereby beating average rates in the market and securing a positive operating cash flow. Our decision to dispose vintage tonnage enabled us to achieve a gain of $3.9 million in early April 2019 and net cash proceeds of about $7.7 million which significantly boosted our liquidity.

“Pioneer Marine also experienced a first period as a successful commercial manager despite the weak market and we aim to further expand on this activity together with our traditional position as an active owner of modern handy size bulkers.”

Liquidity & Capital Resources:

As of March 31, 2019, the Company had a total liquidity of $23.3 million inclusive of $10.9 million in restricted cash. The Company has no capital commitments.

Company’s plan is to proceed with the installation of Ballast Water Treatment System (‘BWTS’) on four vessels of the fleet within 2019 and the remaining fleet vessels up to early 2023. From the current fleet two vessels are already fitted with BWTS.

Financial Review: Three months ended March 31,2019

Adjusted EBITDA totalled to $6.2 million for the quarter, 35% increased as compared to first quarter of 2018.

TCE rate of $8,523 for the first quarter of 2019, is slightly decreased by 5.2% compared to TCE rate of the same period in 2018. Despite the current weak market conditions, the Company achieved a TCE rate far above market indices and this is mainly attributable to Company’s strategy since late 2018 to cover more than half of its vessels under short term period charters to ensure profitability.

An impressive decrease of 13.2% on daily vessel OPEX, which were reduced to $4,333 per day for the three months ended March 31, 2019 compared to $4,992 during the same period in 2018, is mainly due to the cost control efficiencies achieved.

Similarly, adjusted daily G&A rate dropped by 27.4% to $439 per day as a result of our continuous efforts to keep this cost centre at competitive levels compared to its peers.

During the first quarter of 2019, Mykonos Bay completed her special survey with a total cost of $0.7 million while during the same period prior year no such expenditure occurred.

Depreciation cost amounts to $2.4 million impacted upwards due to fleet growth as Pioneer fleet consists of 19 vessels, while in the same period in 2018 the Company owned 16 vessels.

Interest and finance cost of $1.6 million was increased by 12.2% despite reduced margins agreed for the new facilities, mainly due to Libor rates upward trend along with increased average loan balance.

Cash Flow Review: Three months ended March 31, 2019

Cash and cash equivalent, including restricted cash decreased by $3.5 million as at March 31, 2019 and amounted to $23.3 million as compared to $26.8 million as at December 31, 2018.

The decrease is attributable to $7.1 million cash used in financing activities, $0.2 million cash used in investing activities partially offset with $3.8 million cash provided by operating activities.

Cash flow activities highlights during the first quarter of 2019 mainly include, the loan repayments amounted to $4.1 million and prepayment of Paradise Bay loan amount of $2.5 million due to the agreed sale of the vessel. During the same period, the company paid a total of $0.4 million for repurchase of common stock.

The cash proceeds from the sale of Paradise Bay were received upon completion of sale on April 10, 2019 and the net gain of $3.9 million was recognised.

Current Fleet List

Owned Fleet

Vessel	Yard			DWT	Year Built
Handysize
Calm Bay	Saiki Heavy Industries			37,534	2006
Reunion Bay	Kanda Shipbuilding			32,354	2006
Fortune Bay	Shin Kochijyuko			28,671	2006
Ha Long Bay	Kanda Kawajiri			32,311	2007
Teal Bay	Kanda Kawajiri			32,327	2007
Eden Bay	Shimanami Shipyard			28,342	2008
Emerald Bay	Kanda Shipbuilding			32,258	2008
Mykonos Bay	Jinse Shipbuilding			32,411	2009
Resolute Bay	Hyundai Vinashin			36,767	2012
Jupiter Bay	Tsuji Heavy Industries			30,153	2012
Venus Bay	Tsuji Heavy Industries			30,003	2012
Orion Bay	Tsuji Heavy Industries			30,009	2012
Falcon Bay	Yangzhou Guoyu Shipbuilding			38,464	2015
Kite Bay	Yangzhou Guoyu Shipbuilding			38,419	2016
Alsea Bay	Hyundai Mipo Dockyard Co. Ltd			36,892	2011
Liberty Bay	Hyundai Mipo Dockyard Co. Ltd			36,892	2012
Monterey Bay	Hyundai Mipo Dockyard Co. Ltd			36,887	2013
Handymax
Paradise Bay*	Oshima Shipbuilding			46,232	2003
Supramax
Tenacity Bay	Jiangsu Hantong Ship Heavy Industry			56,842	2008

Commercially Managed Fleet

Handysize
Orient Target	Samjin Shipbuilding Co Ltd	33,755	2009
Orient Tide	Samjin Shipbuilding Co Ltd	33,755	2010

*M/V Paradise Bay was delivered to her new owners on April 10, 2019.

Full Report

Source: Pioneer Marine Inc.