Pyxis Tankers reports first quarter profit

Pyxis

Pyxis Tankers Inc., an emerging growth pure play product tanker company, announced unaudited results for the three months ended March 31, 2018.

Summary

For the three months ended March 31, 2018, our time charter equivalent revenues were $4.5 million, which resulted in net income of $0.6 million, or earnings per share (basic and diluted) of $0.03, and our Adjusted EBITDA (see “Non-GAAP Measures and Definitions” below) was $0.1 million.

On February 28, 2018, we refinanced existing indebtedness of $26.9 million for Secondone, Thirdone and Fourthone with a new 5-year secured term loan of $20.5 million and cash of $2.1 million. The remaining balance of approximately $4.3 million was written-off by the previous lender at closing, which was recorded as gain from debt extinguishment in the first quarter of 2018.

Valentios Valentis, our Chairman and CEO commented:

“Overall, our operating results for the first quarter of 2018 were mixed. Early in the period, we expected a challenging spot charter market for medium range tankers (“MRs”), and consequently, we took the opportunity to fix all of our MR’s under short-term time charters at fair rates which averaged around $14,900 per day. However, our small tankers underperformed, and we continue to explore avenues to maximize value, including longer-term solutions, such as, vessel sale or bare boat charter arrangements. During the quarter, we also incurred unscheduled work for one of our vessels, which negatively affected the total operating days for the period.

“As for the balance of 2018, we continue to expect chartering activity to be choppy but with a modest upward trend, especially for the second half of the year. As of May 7, 2018, 66% of the available days in the second quarter were booked for our MRs at an average of $14,900/day, exclusive of options. Our recent employment strategy positions us to take advantage of improving rates later this year. We continue to believe in a longer term, sustainable improvement in charter rates as a result of attractive market fundamentals, such as, significantly lower scheduled deliveries of new build MRs combined with projected solid growth in consumption by end-markets and increasing export-oriented petroleum refinery cargoes. Over the long-term, we intend to maintain our strategy of a mix of time and spot charters.

“While the capital markets continue to be challenging for tanker companies, we will continue to pursue cost-effective, growth capital to further improve our liquidity and selectively acquire MR2s. We remain optimistic about the fundamentals of the product tanker market, specifically for MR’s, and believe that Pyxis Tankers has the platform and position to take advantage of them.”

Results for the three months ended March 31, 2017 and 2018

For the three months ended March 31, 2018, we reported a net income of $0.6 million, or $0.03 basic and diluted earnings per share, compared to a net loss of $1.7 million, or $0.09 basic and diluted loss per share, for the same period in 2017. The improvement in our net result in the first quarter of 2018 was primarily due to the gain from debt extinguishment of $4.3 million, partially offset by the non-cash vessel impairment charge of $1.5 million ($0.07 per share) related to the write down of the carrying amount of Northsea Alpha and Northsea Beta to their fair values. Our Adjusted EBITDA was $0.1 million, representing a decrease of $0.3 million from $0.4 million for the same period in 2017.

Three Months ended March 31,
2017 2018
(Thousands of U.S. dollars, except for daily TCE rates)
Voyage revenues 7,640 6,590
Voyage related costs and commissions (2,931) (2,057)
Time charter equivalent revenues* 4,709 4,533
Total operating days 480 425
Daily time charter equivalent rate* 9,810 10,667

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

Management’s Discussion and Analysis of Financial Results for the Three Months ended March 31, 2017 and 2018 (Amounts are presented in million U.S. dollars, rounded to the nearest one hundred thousand, except as otherwise noted)

Voyage revenues: Voyage revenues of $6.6 million for the three months ended March 31, 2018, represented a decrease of $1.1 million, or 13.7%, from $7.6 million in the comparable period in 2017. The decrease in gross voyage revenues during the first quarter of 2018 was related to a decrease in total operating days attributed to increased idle days between voyage charter employments.

Voyage related costs and commissions: Voyage related costs and commissions of $2.1 million for the three months ended March 31, 2018, represented a decrease of $0.9 million, or 29.8%, from $2.9 million in the comparable period in 2017. The decrease was primarily attributed to lower spot charter activity, which incurs voyage costs.

Vessel operating expenses: Vessel operating expenses of $3.3 million for the three months ended March 31, 2018, represented an increase of $0.3 million, or 11.3%, from $3.0 million in the comparable period in 2017. The increase was primarily attributed to certain unscheduled repairs performed in one of the vessels in our fleet.

General and administrative expenses: General and administrative expenses of $0.7 million for the three months ended March 31, 2018, represented a decrease of $0.1 million, or 13.3%, from $0.8 million in the comparable period in 2017. The decrease in general and administrative expenses was primarily attributed to improved cost efficiencies.

Management fees: For the three months ended March 31, 2018, management fees payable to our ship manager, Pyxis Maritime Corp. (“Maritime”), and to International Tanker Management Ltd., our fleet’s technical manager, of $0.4 million in the aggregate, remained stable compared to the three-month period ended March 31, 2017.

Amortization of special survey costs: Amortization of special survey costs of less than $0.1 million for the three-month period ended March 31, 2018, remained relatively stable compared to the comparable period in 2017.

Depreciation: Depreciation of $1.4 million for the three months ended March 31, 2018, remained flat compared to the three-month period ended March 31, 2017.

Vessel impairment charge: Vessel impairment charge of $1.5 million (non-cash) for the three months ended March 31, 2018, relates to the write down of the carrying amount of Northsea Alpha and Northsea Beta to their fair values. There was no such charge recorded in the comparable period in 2017.

Bad debt provisions: Bad debt provisions of $0.1 million for the three months ended March 31, 2018, represented an increase in doubtful trade accounts receivable.

Gain from debt extinguishment: Gain from debt extinguishment of $4.3 million for the three months ended March 31, 2018, relates to the refinancing of existing indebtedness of Secondone, Thirdone and Fourthone with a new 5-year secured term loan. Approximately $4.3 million was written-off by the previous lender at closing, which was recorded as gain from debt extinguishment in the first quarter of 2018. There was no such gain recorded in the comparable period in 2017.

Gain from financial derivative instrument: The gain from financial derivative instrument for the three months ended March 31, 2018, relates to the net gain from the change in fair value of the interest rate cap for a notional amount of $10.0 million the Company purchased in January 2018. There was no such instrument in the comparable period in 2017.

Interest and finance costs, net: Interest and finance costs, net, of $0.9 million for the three months ended March 31, 2018, represented an increase of $0.2 million, or 24.7%, from $0.7 million in the comparable period in 2017. The increase was mainly attributed to the increase of the LIBOR-based interest rates applied to our outstanding bank debt, as well as the write-off of the unamortized deferred financing costs following the refinancing and extinguishment of the existing indebtedness of Secondone, Thirdone and Fourthone.

We own a modern fleet of six tankers engaged in seaborne transportation of refined petroleum products and other bulk liquids. We are focused on growing our fleet of medium range product tankers, which provide operational flexibility and enhanced earnings potential due to their “eco” features and modifications. We are positioned to opportunistically expand and maximize our fleet due to competitive cost structure, strong customer relationships and an experienced management team whose interests are aligned with those of its shareholders.

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