Pioneer Marine Inc. announces financial results for the second quarter and six months ended June 30, 2017
Friday, Aug 11, 2017
Pioneer Marine Inc. and its subsidiaries (OSLO-OTC: PNRM) ("Pioneer Marine," or the "Company") a leading shipowner and global drybulk handysize transportation service provider announced its financial and operating results for the second quarter ended June 30, 2017.

Financial Highlights:

  • Time Charter equivalent (TCE) revenue
    • $11.1 million for Q2 2017, increased by $4.3 million or 63% compared to Q2 2016; Similarly, TCE per day was increased by 58% to $8,009 per day for the same period.
    • $21.1 million for the six months in 2017, increased by $9.3 million or 79% compared to the same period in 2016; Similarly, TCE per day was increased by 72% to $7,495 per day for the same period.
  • Adjusted EBITDA*
    • $3.1 million for Q2 2017, increased by $3.5 million compared to Q2 2016
    • $4.3 million for the six months in 2017, increased by $7.1 million compared to the same period in 2016
  • Net loss
    • $1.9 million or $0.06 per share for Q2 2017, decreased by $4.8 million compared to Q2 2016
    • $6.8 million or $0.23 per share for the six months in 2017, decreased by $13.9 million compared to the same period in 2016
Net loss for the second quarter and six months ended June 30, 2017 include $1.0 million of restructuring costs and $0.1 million loss on vessel disposition, excluding these expenses, the net loss is $0.8 million or $0.03 per share basic and diluted for the second quarter of 2017 and $5.7 million or $0.19 per share basic and diluted for the six months ended June 30, 2017, respectively.

During the six-month period ended June 30, 2017, six vessels completed their Special Surveys resulting in Drydock expenditure of $3.2 million that were expensed as operating costs in the quarter.

Recent Events:

The Company reached an agreement with its Lenders to permanently remove the management clause contained in the ABN/DVB facility and Sinosure facility.

Liquidity & Capital Resources:

As of June 30, 2017, the Company had a total liquidity of $76.5 million inclusive of $14.9 million in restricted cash.  The Company has no capital commitments.

*For reconciliation and definition of Adjusted EBITDA refer to “Summary of Operating Data (unaudited)” section within this press release.

Management’s Commentary:

”Volatility in dry bulk rates experienced in Q1 continued through the early part of Q2 before significantly decreasing in May / June.  BHSI index started the quarter around $7,900 per day before falling to around $6,800 per day by quarter end, a 14% decrease.

“Earnings recovery, clearly demand led, was fuelled by Chinese import demand for dry bulk commodities, that continued to impress the market. Total coal and iron ore imports increased by 12% y-o-y in first half of 2017, driven mostly by real estate investment and development, which increased by 8% y-o-y, and thermal power generation. However, the weakness seen in Q2 2017 reflects the continued oversupply, with global fleet expanding by 2.3% in first half of 2017 to 812m dwt. The driving force behind this expansion was the 64% y-o-y decline in scrapping activity, leading to the demolition of 8m dwt in the same period. Bulker deliveries have also slowed down, with only 3m dwt of new vessels entering the fleet in the first half of 2017, down 15% y-o-y.  Softening deliveries are expected to help limit bulker fleet growth, with capacity orderbook currently at a thirteen year low of 61m dwt, equivalent to only 8% of overall fleet capacity.

“Meanwhile, second-hand dry bulk asset prices have remained relatively stable in recent months, with sales activity somewhat subdued compared to the firm activity witnessed in the first quarter.

“Overall, the market has clearly recovered from the historical lows of 2016 and with the recent surge some market participants believe that more substantial recovery may be close at hand. Although demand has improved for most major commodities, there remains a persistent level of vessel oversupply, which still needs to be absorbed, and uncertainty remains with regards to the sustainability of Chinese import demand growth. Prevailing market sentiment is that supply / demand balance is reaching an inflection point; however, because demand growth is expected to be marginally better than supply, the impact on shipping rates is likely to be modest.

“Pioneer continues to have the support of its lending syndicates and to operate successfully. With the strong balance sheet, we continue to review opportunities to further leverage our operating platform and position Pioneer to be able to take advantage of any meaningful and sustainable recovery.”

Financial Review:  Three months ended June 30, 2017

Time Charter Equivalent ("TCE") revenue amounted to $11.1 million in the second quarter of 2017 compared to $6.8 million for the second quarter of 2016. TCE per day for the second quarter of 2017 amounted to $8,009 per day as compared to $5,070 per day for the second quarter of 2016. The increase in TCE per day is due to the rising market rates in the second quarter of 2017 as compared to the second quarter of 2016.

Vessel Operating Expenses ("OPEX") amounted to $6.9 million for the second quarter of 2017 as compared to $6.0 million in the second quarter of 2016. OPEX rate per day for the second quarter of 2017 amounted to $4,727 per day, as compared to $4,411 per day for the second quarter of 2016. The increase in OPEX per day is mainly attributable to the additional operating expenses incurred for the vessels that went into drydock in relation to routine repair work and spares delivered while in drydock.

Drydock expense for the second quarter of 2017 amounted to $0.6 million and relates to one vessel which completed her special survey within this period. No vessels were drydocked during the second quarter of 2016.

Depreciation expense for the second quarter of 2017 was $2.0 million, which was unchanged from the second quarter of 2016.

General and administration expenses for the second quarter of 2017 decreased to $1.1 million as compared to $1.2 million in the second quarter of 2016.  G&A expenses per day for the second quarter in 2017 amounted to $742 per day as compared to $884 per day for the second quarter of 2016. The decrease in G&A expenses per day is attributed to the restructuring that commenced within the second quarter of 2017.

Interest expense and finance cost for both the three-month period ended June 30, 2017 and June 30, 2016 amounted to $1.4 million.

Loss on vessel disposition for the second quarter of 2017 amounted to $0.1 million and relates to the sale of the M/V Azure Bay, which was completed on April 3, 2017. There were no vessel sales in the same period of 2016.

Restructuring costs for the second quarter of 2017 amounted to $1.0 million and mainly includes severance payments to senior management, consulting fees, legal fees and various expenses incurred following the change of senior management announced by the Company on May 30, 2017.

Financial Review:  Six months ended June 30, 2017

Time Charter Equivalent ("TCE") revenue amounted to $21.1 million for the six months ended June 30, 2017 compared to $11.8 million in the same prior year period. TCE per day for the first six months of 2017 amounted to $7,495 per day, as compared to $4,361 per day in the same prior year period. The increase in TCE per day is due to the rising market rates in the six months ended June 30, 2017 as compared to the same period in 2016.

Vessel Operating Expenses ("OPEX") amounted to $14.5 million for the six months ended June 30, 2017, as compared to $12.2 million in the same prior year period.  OPEX rate per day for the first six months of 2017 amounted to $4,865 per day as compared to $4,472 per day for the respective period in 2016. The increase in OPEX per day is mainly attributable to the additional operating expenses incurred for the vessels that went into drydock in the first half of 2017 in relation to routine repair work and spares delivered while in drydock.

Drydock expense for the six-month period ended June 30, 2017 amounted to $3.2 million since six vessels completed their special surveys within this period. No vessels were drydocked during the same period in 2016.

Depreciation expense for the six-month period ended June 30, 2017 increased to $4.1 million as compared to $3.9 million during the same period in 2016. The increase is attributable to the increased number of fleet vessels.

General and administration expenses for the six-month period ended June 30, 2017 decreased to $2.2 million from $2.3 million during the same period in 2016. G&A expenses per day for the first six months in 2016 amounted to $734 per day as compared to $850 per day for the same period in 2016. The decrease of G&A expenses per day is attributable to the restructuring that commenced within the second quarter of 2017.

Interest expense and finance cost for the six-month period ended June 30, 2017 increased by $0.6 million to $2.9 million as compared to $2.3 million for the six-month period ended June 30, 2016.  $0.5 million was capitalized to vessels-under-construction in the six-month period ended June 30, 2016, which reduced the total amounted of interest expense and finance cost. In the six-month period ended June 30, 2017, no interest was capitalized to vessels-under-construction given that Company's newbuilding program was effectively terminated on May 23, 2016.

Loss on vessel disposition for the six-month period ended June 30, 2017 amounted to $0.1 million and relates to the sale of the M/V Azure Bay, which was completed on April 3, 2017. There were no vessel sales in the same period of 2016.

Restructuring costs for the six-month period ended June 30, 2017 amounted to $1.0 million and mainly includes severance payments to senior management, consulting fees, legal fees and various expenses incurred following the change of senior management announced by the Company on May 30, 2017.

For more information, please visit: http://www.pioneermarine.com

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