Pyxis Tankers Reports Third Quarter Revenues of $11.1 Million
Pyxis Tankers Inc. (NASDAQ Cap Mkts: PXS) (the “Company” or “Pyxis Tankers”), an international shipping company, today announced its unaudited results for the three and nine month periods ended September 30, 2023.
For the three months ended September 30, 2023, our Revenues, net were $11.1 million. For the same period, our time charter equivalent (“TCE”) revenues were $9.3 million, representing a decrease of approximately $2.7 million, or 22.3%, over the comparable period in 2022 when we operated more vessels. Our net income attributable to common shareholders for the three months ended September 30, 2023 was $3.1 million, representing a decrease of $2.0 million from net income of $5.1 million in the comparable period of 2022. For the third quarter of 2023, the net income per share was $0.29 basic and $0.26 diluted compared to the net income per share of $0.48 basic and $0.42 diluted for the same period in 2022. Our Adjusted EBITDA for the three months ended September 30, 2023 was $5.5 million, which represented a decrease of $2.5 million over the comparable period in 2022. Please see “Non-GAAP Measures and Definitions” below.
In Mid-September, we closed on the previously announced $6.8 million equity investment in an operating joint venture to purchase the 2016 Japanese built Ultramax drybulk carrier “Konkar Ormi”. We own 60% of this joint venture and the balance is owned by an entity related to our Chief Executive Officer and Chairman. The purchase of “Konkar Ormi” for $28.5 million by the joint venture, plus working capital, was funded by $11.3 million of cash equity and a $19.0 million secured five year bank loan. The delivery of the vessel occurred on September 14, 2023 and her initial charter commenced October 5, 2023. We consolidate in our financial statements the aforementioned newly acquired dry bulk “Konkar Ormi” under the relevant ASC 810 guidelines as a result of our control over the joint venture.
We previously announced on September 22, 2023, an agreement to sell the vessel “Pyxis Epsilon”, a 2015 built 50,295 dwt. product tanker, for $40.75 million in cash. Completion of the vessel sale, which is subject to customary closing conditions, is expected to occur during December 2023. After the repayment of the outstanding indebtedness secured by the vessel and the payment of various transaction costs, we should receive cash proceeds of approximately $26.4 million, which is expected to be used for general corporate purposes. During the fourth quarter, 2023, we expect to recognize a non-cash gain from asset disposition of approximately $17.1 million or $1.62 per current outstanding common share or $1.38 per diluted share.
Valentios Valentis, our Chairman and CEO, commented:
“Once again, we are pleased to report solid results for our third fiscal quarter 2023 with Revenues, net of $11.1 million and Net Income attributable to common shareholders of $3.1 million, both sequential improvements from the prior quarter. Even in the face of high inflation, resilient economic activity in many parts of the world has resulted in good demand for transportation fuels. Favorable market fundamentals continue to be supported by low inventories of a number of refined petroleum products. More significantly, the impact of the war in the Ukraine has extended market dislocation, including arbitrage opportunities, as well as redirected trade flows from shorter-hauls to longer distances resulting in ton-mile expansion of seaborne cargoes, thereby reducing available vessel capacity. Consequently, the chartering outlook for product tankers remains healthy and asset values high, reflecting a sustainable and constructive environment for the sector. However, expanding geo-political events, such as the recent Israeli-Hamas conflict, have created far reaching and uncertain implications worldwide and increased market volatility within our sector. Sadly, weather and climate developments, such as the drought affecting transits through the Panama Canal, only add to this complexity.
For the three months ended September 30, 2023, our daily TCE rate for our four Eco-efficient tankers decreased approximately $1,000 per day to $28,024 compared to the same period in 2022. However, Opex for these vessels declined 5.5% during the most recent period to a daily average of $6,513, which help support our operating margin. As we move into the stronger seasonal period of winter, our bookings remain strong. As of November 20, 2023, 84% of the available days in the fourth quarter of 2023 for our MR’s were booked at an estimated average TCE of $29,600 per vessel. Excluding the “Pyxis Epsilon”, two of our tankers are currently under short-term time charters and one in the spot market. We expect to prudently maintain our mixed employment strategy.
For the near term, we expect unprecedent levels of volatility to challenge all of us. In spite of this, we believe charter rates should stay above five-year averages through 2024 given sector supply/demand fundamentals aided by modest inventories of refined petroleum products in numerous locations worldwide as well as the ongoing effects of the G-7 and European Union ban and price caps on seaborne cargoes of Russian refined products. In its October 2023 update, the International Monetary Fund slightly revised its outlook for global GDP growth in 2023 and 2024 to average 3% annually due to resilient economic activity, primarily within the OECD, offset by the headwinds of stricter monetary policies and high, but decelerating inflation. GDP growth for advanced economies is forecasted at 1.5% this year, while emerging and developing economies are expected to achieve growth of 4%. In November 2023, the International Energy Agency slightly revised its forecast for global oil demand to increase 2.4% or 2.4 million barrels per day (“Mb/d”) to 102.0 Mb/d in 2023. In August, global refinery runs hit a record of 83.6 Mb/d and should reach 84.2 Mb/d by year-end. Despite an acceleration in the third quarter of crude prices, which subsequently declined, crack spreads remain above 5 year averages. The processing of cheaper Russian Urals crude has benefitted a number of refineries in India and China, leading to significant increases in refined product exports to capture arbitrage opportunities and further expand ton-mile shipments. At the end of October, a leading research firm updated its forecast for global product tanker ton-miles to increase 6% in 2024 with cargo volumes to grow 3.5%. Over the long-term, scheduled changes in the global refinery landscape, led by capacity additions outside of the OECD, should provide added longer-haul volumes. Although new build ordering has picked-up, the MR orderbook still remains relatively low by historical standards with deliveries moving into 2026. Moreover, the large number of inefficient 20+ year old tankers exceed the orderbook and are demolition candidates during the next five years. Overall, we continue to believe MR tanker supply to grow annually at less than 2% net, through 2024.
Secondhand values for modern eco-efficient product tankers have remained historically very high. We have continued to take advantage of these exceptionally strong conditions by selling the eight year old “Pyxis Epsilon” at a very attractive price. Upon closing of the sale, we anticipate that we will have in excess of $57.0 million in available cash for additional capital projects. Assuming the availability of moderate leverage, we could have the fire-power to double the size of our fleet under the right circumstances. However, at this time asset prices are still too high for us to aggressively pursue fleet expansion of our MR’s. In order to enhance shareholder value, we will continue to improve our balance sheet, repurchase shares and selectively consider compelling investments in other shipping segments, including dry bulk.”
Results for the three months ended September 30, 2022 and 2023
Amounts relating to variations in period–on–period comparisons shown in this section are derived from the interim consolidated financials presented below. Company’s Financial Statements, as of September 30, 2023, fully consolidate for first time, the aforementioned operating joint venture of the newly acquired dry bulk vessel “Konkar Ormi” under the relevant ASC 810 guidelines.
For the three months ended September 30, 2023, we reported Revenues, net of $11.1 million, or 34.7% lower than $17.0 million in the comparable 2022 period. Our net income attributable to common shareholders was $3.1 million, or $0.29 basic and $0.26 diluted net income per share, compared to a net income attributable to common shareholders of $5.1 million, or $0.48 basic and $0.42 diluted net income per share, for the same period in 2022. The weighted average number of basic shares had increased by approximately 126 thousand common shares from the third quarter of 2022 to 10.7 million shares in the same period of 2023. The weighted average number of diluted common shares in 2023 of approximately 12.6 million shares assumes the full conversion of all the outstanding Series A Convertible Preferred Stock in the most recent period. The average MR daily TCE rate during the third quarter of 2023 was $28,024 or 3.6% lower than the $29,062 MR daily TCE rate for the same period in 2022, due to lower demurrage income, led by lower spot chartering activity. The revenue mix for the third quarter of 2023 was 59% from short-term time charters and 41% from spot market employment. Adjusted EBITDA decreased by $2.5 million to $5.5 million in the third quarter of 2023 from $8.0 million for the same period in 2022.
Results for the nine months ended September 30, 2022 and 2023
For the nine months ended September 30, 2023, we reported Revenues, net of $32.2 million, a decrease of $7.7 million, or 19.4%, from $40.0 million in the comparable period of 2022. During the nine months of 2023, our MR’s were contracted mainly under short-term time charters of 847 days and for the rest of the period employed in the spot market resulting in an overall MR daily TCE rate for our fleet of $25,404.
Our net income attributable to common shareholders for the nine months ended September 30, 2023, was $14.6 million, or income of $1.35 per share basic and $1.21 per share diluted, compared to a net income of $6.0 million, or an income of $0.57 per share basic and $0.53 per share diluted for the same period in 2022. A $8.0 million gain on the sale of one MR was recognized in the 2023 period. Higher MR daily TCE rate of $25,404 and higher MR fleet utilization of 95.0% for our MR’s during the nine months ended September 30, 2023, were compared to a MR daily TCE rate of $23,079 and MR fleet utilization of 86.4% during the same period in 2022. Our Adjusted EBITDA of $14.9 million represented an increase of $0.4 million from $14.5 million for the same nine month period in 2022.
Source: Pyxis Tankers