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 fourth quarter and year ended December 31, 2019.
Torben Janholt, Chief Executive Officer commented: “Despite the challenging year for the drybulk industry, Pioneer Marine managed to conclude the most profitable year in its entire history and the second consecutive year with a positive bottom line. Our chartering strategy to cover significant part of the weak first quarter in combination with our consistent above market performance contributed significantly to Company’s results. The decision to dispose older tonnage at attractive selling prices and the efficient cost control throughout the organization paved the way for Pioneer to achieve a Net Profit of $12.5 million and EBITDA of $27.4 million.
“Towards the end of 2019, we distributed a cash dividend of $0.40 per share to our shareholders. Looking forward, we aim to take advantage of market opportunities in spite of the present depressed shipping scenarios and maximise our shareholders wealth.
“Taking this opportunity, I would like to announce that my journey with Pioneer has come to an end and effective February 28, 2020 I have decided to retire as the Company’s CEO and member of the board. It has been a pleasure to work with such a motivated group of people and I am proud that together we brought Pioneer to a new era. Mr. Dimitrios Papoulis, who currently serves as the Company’s COO will be appointed the new CEO and Mrs. Korinna Tapaktsoglou also serving as CFO, will be appointed as member of the Board of Directors.”
On February 27, 2020 the Board of Directors of Pioneer Marine declared a cash dividend of $0.30 per share of common stock. The cash dividend will be payable on or around March 12, 2020 to shareholders of record on March 5, 2020. The shares will be traded as ex dividend as of March 4, 2020.
Liquidity & Capital Resources:
As of December 31, 2019, the Company had a total liquidity of $27.4 million inclusive of $11 million in restricted cash.
The Company’s plan is to proceed with the installation of Ballast Water Treatment System (‘BWTS’) on three vessels of the fleet within 2020 with an anticipated cost of $0.9 million and on the remaining fleet vessels up to early 2023. To date, there are three vessels out of the current fleet which have been already fitted with BWTS.
2019 Events at a glance:
Consistent with the announced strategy to dispose of older tonnage Pioneer Marine has agreed to the following vessels’ disposal during the year ended December 31, 2019:
• On January 23, 2019, the Company entered into a Memorandum of Agreement (“MOA”) for the sale of M/V Paradise Bay to an unrelated third party on a charter free basis. The vessel was delivered to its new owners on April 10, 2019 and the Company recorded a gain on sale of $3.8 million.
• On October 24, 2019, the Company entered into a Memorandum of Agreement (“MOA”) for the sale of M/V Fortune Bay to an unrelated third party on a charter free basis. The vessel is expected to be delivered to her new owners latest by early July 2020.
• On November 14, 2019, the Company entered into a Memorandum of Agreement (“MOA”) for the sale of M/V Tenacity Bay to an unrelated third party on a charter free basis. The vessel was delivered to her new owners on December 18, 2019 and the Company recorded a gain on sale of $3.0 million.
• On December 24, 2019, the Company entered into a Memorandum of Agreement (“MOA”) for the sale of M/V Calm Bay to an unrelated third party on a charter free basis. On January 17, 2020, the sale of M/V Calm Bay was completed, and the vessel was delivered to its new owners.
• On July 29, 2019 the Company entered into a commercial management agreement with a third party, to undertake the commercial management of five dry bulk vessels, enhancing in this context its operating platform.
• On October 28, 2019, the installation of the Ballast Water Treatment System on the M/V Emerald Bay was completed successfully. The project was managed by in-house technical personnel and was carried out while the vessel was en-route without disrupting vessel’s operations, enabling cost efficiencies as the installation was completed with a total expenditure of $0.3 million.
• On November 20, 2019, the Board of Directors of Pioneer Marine Inc. declared a cash dividend of $0.40 per outstanding share of company’s Common Stock. On December 6, 2019, the dividend amounting to $10,186, was paid to stockholders of record as of November 29, 2019.
• Within 2019, the Company repurchased 826,770 of its own shares for a total amount of $2,609 thousand. All shares were acquired at a discounted price per share compared to Company’s Net Asset Value, increasing the treasury shares held by the Company to a total of 4,867,832 shares.
Financial Review: Fourth Quarter 2019
The fourth quarter of 2019 contributed a positive amount of $5.8 million to Company’s annual results, marking a 11% increase compared to the fourth quarter of 2018.
EBITDA totalled to $9.3 million increased by $0.2 million or 2% compared to prior year period.
TCE rate of $9,060 slightly lower by 10% compared to $10,085 TCE per day for the same period of 2018 depicting the poor market conditions prevailing during the last quarter of 2019, however the achieved TCE rate consistently remain well above market by 13%.
Daily vessel OPEX are slightly increased to $4,161 per day during this quarter, as compared to $4,040 for the same period during 2018, the increase is mainly attributable to expenses incurred in preparation of vessels disposal within this quarter.
Daily G&A rate remained at the same levels both in fourth quarter of 2019 and 2018 as a result of our continuous efforts to keep this cost centre at competitive levels compared to our peers.
Interest and finance cost of $1.2 million was decreased by 20% compared to prior year same period, mainly due to the reduced Libor rates combined with reduced loan balances.
Cash Flow Review: Year ended December 31, 2019
Cash and cash equivalent, including restricted cash increased by $0.5 million as at December 31, 2019 and amounted to $27.3 million as compared to $26.8 million as at December 31, 2018.
The increase is attributable to cash provided by operating activities of $17.2 million and cash provided by investing activities of $17.6 million partially offset by cash used in financing activities of $34.2 million.
Cash flow activities highlights during the year include:
▪ $18.2 million cash inflow from vessels disposal completed within the year; ▪ $21.2 million repayments and prepayments due to vessels sale of loans; ▪ $2.6 million paid for repurchase of common stock, and ▪ $10.2 million dividend distribution to Company’s shareholders
Financial Review: Year 2019
Net Income for the year ended December 31, 2019 increased by 81% and amounted to $ 12.5 million as compared to 2018 net income of $7 million. This is mainly attributable to the gain on the sale of M/V Paradise Bay and M/V Tenacity Bay of $6.8 million. The company reported an EBITDA of $27.4 million increased by $5.8 million or 27% compared to 2018.
TCE revenue for 2019 amounted to $53.8 million, decreased by 9% compared to previous year results, mainly due to weaker market conditions. TCE per day for the year ended December 31, 2019 amounted to $8,213, decreased by 13% compared to previous year results. Despite the poor conditions, the Company for a fourth consecutive year achieved to outperform the market by 17% and maintain a high utilisation rate of 98.4%.
Cost reducing initiatives and optimisation of cost control procedures developed by the Company achieved a healthy OPEX rate of $4,251 per day, significantly reduced compared to $4,484 per day for 2018.
Efficient cost management throughout Company’s departments contributed towards the reduction of the daily G&A rate to $546 per day, a drop of 17% compared to previous year.
Drydock cost for the year amounted to $1.1 million as two vessels of our fleet performed their special surveys during 2019 while in previous year four vessels of our fleet underwent special surveys for a total cost of $2.4 million.
Interest and finance cost amounts to $5.6 million, a decrease of 8% compared to prior year results mainly due to slightly reduced average Libor rates prevailing as well as reduced loan balances.