Pyxis Tankers Inc. an emerging growth pure play product tanker company, announced unaudited results for the three months and year ended December 31, 2018.
For the three months ended December 31, 2018, our time charter equivalent revenues were $4.4 million which contributed to a net loss of $3.4 million, or a loss per share (basic and diluted) of $0.16, after a non-cash vessel impairment charge of $0.7 million or approximately $0.04 per share, and our Adjusted EBITDA (see “Non-GAAP Measures and Definitions” below) was $0.2 million.
Valentios Valentis, our Chairman and CEO commented:
“Our operating results for the fourth quarter of 2018 reflected a deterioration over the comparable period in 2017. Spot charter rates for medium range tankers (“MRs”) in the beginning of the fourth quarter, 2018 were near record lows but rebounded towards the end of the period. We decided to fix three of our MR’s on short-term time charters in order to ride out this difficult period. In addition to normal seasonal demand for heating oil in the Northern Hemisphere, the upswing was a result of some replenishment of refined products held in storage worldwide, healthier demand within the Atlantic basin and a stronger crude tanker market earlier in the quarter which caused certain larger product tankers to trade dirty cargoes and reduce available capacity to transport clean petroleum products, such as, diesel or jet fuel.
“Through the summer 2019, we expect chartering activity to be choppy within the product tanker sector. However, starting in the fall, we expect the market to improve significantly beyond the historical seasonal upswing of the fourth quarter. The primary reason is the worldwide impact of new IMO regulations regarding the use of low-sulphur fuels for a majority of the shipping industry. We have recently fixed two of our younger MR’s under time charters at higher rates of approximately $15,400 for one year which grant the charterer an option to extend for an additional year at a healthy rate of $17,500/day/vessel starting in the second quarter 2020. The Pyxis Malou will shortly finish her special survey, whereupon she will be employed under a six to eight month T/C at $14,000/day. Our remaining vessels will likely trade in the spot market. We believe this mixed employment strategy positions us to take advantage of increasing rates later this year. Overall, we continue to believe in a longer term, sustainable improvement in charter rates as a result of attractive market fundamentals, such as a relatively low newbuild orderbook for MRs combined with projected solid growth in consumption and increasing export-oriented petroleum refinery cargoes. Over the long-term, we intend to maintain this chartering strategy.
“During the difficult year of 2018, we focused on things over which we had greater control – costs and debt. We continue to be pleased with our disciplined, cost-effective operating structure, which was evidenced by our fleet-wide daily operating expenses of $5,785 per vessel for 2018, and represented a slight decrease from the prior year. Total daily operational costs, which include management fees and G & A expenses, for our eco-efficient MR’s continued to be very competitive within our sector at slightly over $7,800/day.
Overall, our leverage is on par within the tanker industry with year-end 2018 net debt to total capitalization of 59%. During the year, we completed debt refinancings of four of our vessels, in order to take advantage of a sizeable debt discount from one of our lenders who was exiting the industry, enhance our balance sheet liquidity and extend debt maturities. Our earliest balloon payment is 3.5 years from now.
“Over the near-term, we will continue to pursue cost-effective, growth capital to further improve our liquidity and selectively acquire MR2s of up to 10 years of age. We remain optimistic about the fundamentals of the product tanker market, and this fall should commence a sustainable period of an attractive chartering environment. We believe that Pyxis Tankers is positioned to take advantage of various opportunities to enhance shareholder value. ”