Pyxis posts profit increase

Pyxis

Pyxis Tankers, an emerging growth pure play product tanker company, announced unaudited results for the three and six months ended June 30, 2016.

Summary:

Reported time charter equivalent revenues of $7.0 million for the three months ended June 30, 2016, which resulted in net income of $0.4 million, or earnings per share (basic and diluted) of $0.02, and EBITDA of $2.6 million.

Valentios Valentis, our Chairman and CEO commented:

“The product tanker market was softer than expected in the three months ended June 30, 2016 due to high levels of refined product inventories caused by moderating demand for transportation fuels and additions to the global product tanker fleet, which peaked in the second quarter. These factors exacerbated a period typically characterized by seasonal weakness and put pressure on spot charter rates. To a fair extent, however, we were insulated from market conditions as five out of our six tankers were employed under fixed rate time charters during this period. Time charter revenues provided approximately 82% of our voyage revenues during the three months ended June 30, 2016. For the balance of the year, 48% of our available operating days (64% with charterers’ options) were booked on time charters as of June 30, 2016. This is consistent with our mixed chartering strategy, which secures visible cash flows through time charters while also retaining upside optionality in the spot market in order to participate in periods of market strength. We have a positive outlook for the product tanker sector in the fourth calendar quarter of 2016, historically a seasonally strong period, and beyond as increasing ton-mile demand for the transportation of refined products is expected to exceed net growth in the global medium range (“MR”) product tanker fleet, our main area of focus. It is important to note that only a handful of new build orders have been placed so far this year, and certain estimates have supply growth to be 3.4% / year through 2017.

As we have stated previously, a cost-competitive operating structure is strategically and financially important to management and our shareholders. In the quarter ended June 30, 2016, daily operating expenses per vessel for our eco-efficient and eco-modified MR tankers were $5,437 and $6,703, respectively. These operating results combined with our daily ship management fees and general and administrative expenses generated total daily operational costs of $7,536 and $8,802 for our eco-efficient and eco-mod vessels, respectively, in the second quarter. Our mixed chartering strategy, quality operations and cost-effective platform should leave us well positioned to benefit from what we expect will be an improving market. We will also selectively pursue accretive acquisitions, recognizing the cost and availability of capital continues to be very challenging.”

Results for the three months ended June 30, 2015 and 2016

For the three months ended June 30, 2016, we achieved net income of $0.4 million, or $0.02 basic and diluted earnings per share, compared to net income of $0.3 million, or $0.01 basic and diluted earnings per share, for the same period in 2015. For the second quarter of 2016, our EBITDA (see “Non-GAAP Measures and Definitions” below) was $2.6 million, an increase of $0.2 million from $2.4 million for the same period in 2015. The increase in net income was primarily due to a $0.5 million increase in time charter equivalent revenues, which were partially offset by a $0.3 million increase in general and administrative expenses, as we became a publicly-listed company effective October 28, 2015.

Results for the six months ended June 30, 2015 and 2016

For the six months ended June 30, 2016, we achieved net income of $1.5 million, or $0.08 basic and diluted earnings per share, compared to net income of $1.6 million, or $0.09 basic and diluted earnings per share, for the same period in 2015. For the first six months of 2016, our EBITDA (see “Non-GAAP Measures and Definitions” below) was $5.9 million, an increase of $0.1 million from $5.7 million for the same period in 2015. Despite an increase of time charter equivalent revenues of $0.7 million in the first six months of 2016, the decline in net income was primarily due to a $0.8 million increase in general and administrative expenses.

Three months ended June 30, Six months ended June 30,
2015 2016 2015 2016
(Thousands of U.S. dollars, except for daily TCE rates)
Voyage revenues 7,168 7,893 16,561 16,341
Voyage related costs and commissions (630) (875) (2,630) (1,680)
Time charter equivalent revenues* 6,538 7,018 13,931 14,661
Total operating days 501 519 1,021 1,052
Daily time charter equivalent rate* 13,042 13,529 13,645 13,939

* Subject to rounding; Please see “Non-GAAP Measures and Definitions” below.

Management’s Discussion and Analysis of Financial Results for the Three Months ended June 30, 2015 and 2016

(Amounts are presented in million U.S. Dollars, rounded to the nearest one hundred thousand, except otherwise noted)

Voyage revenues: Voyage revenues of $7.9 million for the three months ended June 30, 2016 represented an increase of $0.7 million, or 10.1%, from $7.2 million over the comparable period in 2015. The increase during the second quarter of 2016 was attributed to higher time charter equivalent rate, as well as to an increase in total operating days.

Voyage related costs and commissions: Voyage related costs and commissions of $0.9 million for the three months ended June 30, 2016 represented an increase of $0.2 million, or 38.9%, from $0.6 million in the comparable period in 2015. The increase was primarily attributed to greater spot charter activity, which incurs voyage costs.

Vessel operating expenses: Vessel operating expenses of $3.3 million for the three months ended June 30, 2016 were basically flat as compared to the same period in 2015.

General and administrative expenses: General and administrative expenses of $0.7 million for the three months ended June 30, 2016 increased by $0.3 million, or 51.3%, from $0.5 million in the comparable period in 2015, mainly due to other fees and expenses associated with us being a newly listed public company.

Management fees, related parties: Management fees to related parties, our ship manager Pyxis Maritime Corp., of $0.1 million for the three months ended June 30, 2016 remained flat compared to the three month period ended June 30, 2015.

Management fees, other: Management fees to others, comprised of fees paid to International Tanker Management Ltd. (“ITM”), our fleet’s technical manager, and North Sea Tankers BV (“NST”), the commercial manager of our small tankers, of $0.3 million for the three months ended June 30, 2016 remained relatively stable compared to the three month period ended June 30, 2015. In March and June 2016, we sent notices of termination of the commercial management agreements with NST for the Northsea Beta and Northsea Alpha, respectively. In June 2016, Pyxis Maritime assumed full commercial management of the Northsea Beta, and it is expected to assume full commercial management of the Northsea Alpha in October 2016, following the vessel’s redelivery.

Amortization of special survey costs: Amortization of special survey costs of $0.1 million for the three months ended June 30, 2016 remained relatively stable compared to the three month period ended June 30, 2015.

Depreciation: Depreciation of $1.4 million for the three months ended June 30, 2016 remained flat compared to the three month period ended June 30, 2015.

Interest and finance costs, net: Interest and finance costs, net for the three months ended June 30, 2016 amounted to $0.7 million, compared to $0.6 million in the comparable period in 2015, an increase of $0.1 million, or 11.6%. The increase is mainly attributed to the increase of the LIBOR-based interest rates applied to our outstanding debt.

Management’s Discussion and Analysis of Financial Results for the Six Months ended June 30, 2015 and 2016

Voyage revenues: Voyage revenues of $16.3 million for the six months ended June 30, 2016 represented a decrease of $0.2 million, or 1.3%, from $16.6 million over the comparable period in 2015. The decrease was primarily attributed to the Pyxis Malou, which was employed during the first six months of 2016 at a lower time charter rate than its spot charter rates during the comparable period of 2015, partially offset by an increase in total operating days during the first six months of 2016.

Voyage related costs and commissions: Voyage related costs and commissions of $1.7 million for the six months ended June 30, 2016 represented a decrease of $1.0 million, or 36.1%, from $2.6 million in the comparable period in 2015. The decrease was primarily attributed to the Pyxis Malou, which did not incur voyage costs under its time charter in 2016.

Vessel operating expenses: Vessel operating expenses of $6.6 million for the six months ended June 30, 2016 declined $0.2 million, or 3.3% from $6.8 million over the comparable period in 2015. This decrease was mainly attributed to the absence in the first six months of 2016 of the one-time, pre-operating costs incurred by the new build Pyxis Epsilon, which was delivered to our fleet in January, 2015.

General and administrative expenses: General and administrative expenses of $1.4 million for the six months ended June 30, 2016 increased by $0.8 million, or 137.7%, from $0.6 million in the comparable period in 2015, mainly due to the additional administration fees payable under the Head Management Agreement (which commenced effectively on March 23, 2015) of $0.3 million and other fees and expenses of $0.2 million associated with us being a newly listed public company.

Management fees, related parties: Management fees to related parties, our ship manager Pyxis Maritime Corp., of $0.3 million for the six months ended June 30, 2016 remained relatively stable compared to the six month period ended June 30, 2015.

Management fees, other: Management fees to others, comprised of fees paid to ITM and NST of $0.5 million in the aggregate for the six months ended June 30, 2016 remained relatively stable compared to the same period in 2015.

Amortization of special survey costs: Amortization of special survey costs of $0.1 million for the six months ended June 30, 2016 increased by $0.1 million or 153.1%, compared to the same period in 2015, mainly due to the amortization of the special surveys performed by Northsea Alpha and Northsea Beta during the second quarter of 2015.

Depreciation: Depreciation of $2.9 million for the six months ended June 30, 2016 remained relatively stable compared to the same period in 2015.

Interest and finance costs, net: Interest and finance costs, net for the six months ended June 30, 2016 amounted to $1.4 million, compared to $1.2 million in the comparable period in 2015, an increase of $0.2 million, or 14.7%. The increase is mainly attributed to the increase of the LIBOR-based interest rates applied to our outstanding debt.

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