Pyxis Tankers reports “solid results” in Q4

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Pyxis Tankers, an international shipping company, announced unaudited results for the three months and year ended December 31, 2023.

For the three months ended December 31, 2023, our Revenues, net were $13.2 million. For the same period, our time charter equivalent (“TCE”) revenues were $12.0 million, a decrease of $1.9 million, or 13.6%, over the comparable period in 2022 when we operated more vessels. Our net income attributable to common shareholders for the fourth quarter ended December 31, 2023, was $21.6 million, an increase of $15.1 million from net income of $6.5 million in the comparable period of 2022. During the three months ended December 31, 2023, we sold one MR tanker and recognized a $17.1 million gain. For the fourth quarter of 2023, the net income per common share was $2.04 basic and $1.76 diluted compared to the net income per common share of $0.61 basic and $0.53 diluted for the same period in 2022. Our Adjusted EBITDA for the three months ended December 31, 2023, was $7.7 million, a decrease of $2.0 million over the comparable period in 2022. Please see “Non-GAAP Measures and Definitions” below.

On November 28, 2023, we entered into a definitive agreement with an unaffiliated third party to purchase an 82,013 dwt dry-bulk vessel built in 2015 at Jiangsu New Yangzi Shipbuilding, fitted with a ballast water treatment system and scrubber. The eco-efficient Kamsarmax, delivered on February 15, 2024, had a purchase price of $26.6 million which was funded by a combination of secured bank debt of $14.5 million and cash on hand. The five year amortizing bank loan is priced at SOFR plus 2.35% and is secured by, among other things, the vessel. We have named the vessel the “Konkar Asteri” and it commenced commercial operations on February 29, 2024. This acquisition of this mid-sized modern scrubber-fitted eco-vessel represents our second investment of our recent strategic expansion into the dry-bulk sector.

On December 15, 2023, the vessel “Pyxis Epsilon”, a 2015 built 50,295 dwt. product tanker, was sold for $40.75 million in cash. After the repayment of the outstanding indebtedness secured by the vessel and the payment of various transaction costs, we received cash proceeds of $26.4 million, which will be used for general corporate purposes. A non-cash gain from asset disposition of $17.1 million was recognized in the fourth quarter, of 2023.

Valentios Valentis, our Chairman and CEO, commented:

We are pleased to report solid results for the fourth fiscal quarter, 2023 with Revenues, net of $13.2 million and Net Income attributable to common shareholders of $21.6 million, which included a gain of $1.36 per fully diluted share on the sale of our eight-year-old MR.  In the fourth quarter of 2023, the product tanker sector experienced strong chartering activity due to good global demand for transportation fuels, relatively low inventories of many petroleum products, healthy refinery margins, combined with the impact of the ongoing war in the Ukraine which has led to continued market dislocation of shifting trade patterns and ton-mile expansion of seaborne cargo transportation. During the fourth quarter, we reported an average daily TCE for our MR’s of almost $30,500. Recent hostilities in the Red Sea have further supported the strong product tanker environment and as of March 12, 2024, 92% of our MR available days in Q1 2024, were booked at an average TCE of $30,300 per day. Following the recent sale of the “Pyxis Epsilon”, we now own and operate three modern eco-efficient MR’s, two of which currently employed under short-term time charters and one on spot.

Tanker asset values have continued to be exceptionally strong. In 2023, we took advantage of the market conditions to sell two of our MR’s, which had an average age of 11 years, to realize total capital gains of over $25 million and, most importantly, generate over $44 million in net cash proceeds after repayment of associated debt and transaction costs. In addition to strengthening our balance sheet, this cash infusion has given us the opportunity to diversify into the dry-bulk shipping. Our senior management team and Board of Directors have significant experience in this sector which, we believe, has a positive outlook given supply/demand fundamentals and may provide a counter-cyclical and seasonal balance to product tankers. In the later part of the third quarter of 2023, we acquired a 2016 Japanese built scrubber-fitted Ultramax, the “Konkar Ormi”, and last month completed the acquisition of 2015-built scrubber-fitted Kamsarmax, the “Konkar Asteri”. In the fourth quarter of 2023, the “Konkar Ormi” reported a daily TCE of over $16,900. With the commencement of operations of the “Konkar Asteri” in the current quarter, 70% of available days for our bulkers are booked at an average TCE of $19,600 per day as of March 12, 2024.

At this junction, we expect the chartering environment for product tankers and dry-bulk carriers to remain constructive for the remainder of 2024. Solid global demand for seaborne cargoes of a broad range of refined petroleum products and dry-bulk commodities is expected to continue with the orderbook remaining highly manageable. Historically, demand growth for many refined products and dry-bulk commodities has been reasonably correlated to global GDP growth. The IMF recently estimated the global economies to increase 3.1% in 2024. According to Drewry, as of February 29, 2024, the MR2 orderbook stood at 181 or 10.7% of global fleet with similar 11% or 187 MR2 over 20 years of age. Net supply growth for MR2 of approximately 2% this year is a fair estimate in our opinion. Separately, in February 2024 Howe Robinson forecasted net fleet growth in the dry-bulk sector of 2.2% in 2024. Fundamental cargo demand is further supported by the ton-mile effects stemming from the continued hostilities of the Russian-Ukrainian war and in the Middle East, as well as the drought limiting transits at the Panama Canal which only boost the strength of our markets. While moderating inflation and the prospect of softening monetary policies by many central banks later this year promote more optimism, the growing complexity within our sectors and the uncertainty surrounding macro-economic conditions and global events necessitate continued prudent management.

Given the current high asset value environment and positive outlook for our markets, developing accretive opportunities for fleet expansion of mid-sized vessels should continue to be challenging, especially for the purchase of modern eco-efficient MRs. In light of this, we expect to maintain our disciplined approach to capital allocation until more attractive situations materialize which may further enable us to enhance shareholder value. The current available cash on hand and short-term deposits of almost $48 million, combined with potential modest bank debt should provide us the funds and flexibility to pursue the acquisition of up to three additional mid-sized vessels at reasonable terms when the opportune moments arise. In the short-term, we expect to continue to use free cash flow to further increase balance sheet liquidity, repay debt and repurchase our common shares.”