Pioneer Marine a leading shipowner and global drybulk handysize transportation service provider announced its financial and operating results for the quarter ended September 30, 2020.
Financial Highlights at a glance:
Net (loss) / income
Adjusted Net (loss) / income
Time Charter equivalent (“TCE”) revenue Adjusted EBITDA*
Third Quarter 2020
($2.1) million ($0.8) million $9.1 million $2.0 million
Third Quarter 2019 $3.0 million
$3.0 million $14.7 million $6.7 million
Jim Papoulis, Chief Executive Officer commented: “There was extensive uncertainty relating to COVID- 19 during the third quarter with the second massive wave significantly affecting businesses, countries, and people worldwide. Despite the ongoing difficulties created by the pandemic, we have made remarkable progress in reducing our operating expenses as well as our debt service costs, and we have significantly enhanced our liquidity. On October 23, 2020 Pioneer successfully completed the sale of the M/V Fortune Bay boosting Company’s liquidity by $2.9 million in free cash.
“While we’re still facing challenges, it’s important to remember the good work and innovation across our company. This is imperative for our future. I am thankful for the dedication and professionalism of our employees, both onshore and offshore and I would like to thank them for their amazing efforts put in during this challenging time. The shipping sector has always proven to be resilient — and so has Pioneer.
“Pioneer remains focused on adapting to this ever-changing environment by delivering the best possible results taking advantage of the Company’s solid fundamentals. We have reported a positive EBITDA of $2.0 million for the third quarter of 2020 and $5.2 million for the nine months ended September 30, 2020.
Looking ahead, we are confident that the COVID-19 economic stimulus relief, will contribute towards what we believe will be a sustainably healthy market for one of the most vital supply chain elements. Pioneer is well positioned to capture the upturn in TC rates, aiming to cover part of the fleet to period time charter contracts securing healthy cash flow for the near future. In addition, we will continue to pursue opportunities that will serve our strategic targets of sustainable growth.”
Financial Review: Three months ended September 30,2020
The reported results for the three-month period ended September 30, 2020 amount to $2.1 million net loss as compared to $3.0 million net income for the respective previous year period. The decrease is attributable to the poor performance of the dry bulk market during the unprecedented COVID-19 pandemic outbreak. However, net loss for the third quarter of 2020 was also affected by the non – cash impairment charge of $0.7 million relating to M/V Fortune Bay as well as the loss resulting from the disposal of M/V Falcon Bay of $0.6 million, excluding these one off charges the net loss for the third quarter of 2020 amounts to $0.8 million.
Adjusted EBITDA totalled $2.0 million for the third quarter 2020, decreased by $4.7 million as compared to the third quarter of 2019 mainly due to weak conditions prevailing as described above. Consequently, the TCE rate of $6,611 for the third quarter of 2020 is decreased by 26% compared to TCE rate of the same period in 2019.
OPEX per day were increased to $4,469 per day for the three months ended September 30, 2020 compared to $4,242 during the same period in 2019. The upward variation is mainly attributable to the higher costs for crew changes occurred in this quarter as a result of COVID-19 restrictions and additional requirements.
General and administrative expenses are reduced by $0.1 million for the three months ended September 30, 2020 or 11.3% as compared to the comparative prior year period. While the G&A per day basis commercial days is further reduced by 11% to $429 per day.
Loss on vessel disposal for the third quarter of 2020 amounted to $0.6 million and relates to the sale of the M/V Falcon Bay, which was completed on August 13, 2020. There was no sale of any vessel in the same period of 2019.
Vessel impairment loss for the third quarter of 2020 amounted to $0.7 million. It relates to the write down of the carrying value of M/V Fortune Bay to its fair value following the impairment exercise performed triggered by the executed contract for the disposal of the vessel. There was no impairment charge for the same period in 2019.
Depreciation cost amounts to $1.9 million and is impacted downwards due to fleet reduction as Pioneer fleet consists of 15 vessels, while in the same period in 2019 the Company owned 18 vessels.
Interest and finance cost of $0.8 million was decreased by 40.1% positively affected from the reduced debt levels and the significantly reduced Libor rates.
Financial Review: Nine months ended September 30,2020
Company reported a Net Loss of $9.6million for the nine-month period ended September 30, 2020 as compared to $6.7 million net income for the respective period during 2019.
However, net loss for the nine month period ended was also affected by the non – cash impairment loss of $6.0 million relating to both M/V Falcon Bay and M/V Fortune Bay, the loss resulting from the disposal of M/V Calm Bay and M/V Falcon Bay of $0.7 million and the loss from devaluation of bunkers inventory of $0.3 million partially offset with the gain resulting from the contract termination of M/V Fortune Bay of $1.0 million. Excluding these non-cash items and one-off charges, the net loss for the third quarter of 2020 amounts to $3.7 million.
The current COVID-19 pandemic has had a global impact with negative results among almost all sectors of economic activity. The shipping industry is unavoidably affected by this unprecedent financial environment, however despite the current weak market conditions, the Company managed to achieve a TCE rate per day well above market indices at $6,124 while maintaining a high utilisation rate at 98.1%.
Adjusted EBITDA totalled $5.2 million for the nine-month period ended September 30, 2020, decreased by $10.0 million as compared to nine-month period ended September 30, 2019.
The continuous cost reducing initiatives and optimisation of cost control procedures developed by the Company achieved a healthy OPEX rate of $4,259 per day, largely-in line with the $4,281 incurred during relative period in 2019 despite the increased crew change cost as a result of the travel restrictions and additional quarantine requirements.
General and administrative expenses are reduced by $0.1 million for the nine-month ended September 30, 2020 compared to the respective period in 2019. While G&A per day basis commercial days of $410 per day for the nine-month period of 2020 are 9% lower compared to the same period of 2019.
Loss on vessel disposal for the third quarter of 2020 amounted to $0.7 million and relates to the sale of the M/V Calm Bay and the M/V Falcon Bay, which was completed on January 17, 2020 and August 13, 2020, respectively. The comparative gain of $3.9 million in the nine months ended 2020 relate to the sale of M/V Paradise Bay and M/V Tenacity Bay.
Vessel impairment charge for the nine-month period ended September 30, 2020 amounted to $6.0 million. It relates to the write down of the carrying value of M/V Falcon Bay and M/V Fortune Bay to their fair values following the impairment exercise performed pursuant to the agreements entered from their disposal. There was no impairment charge in the same period in 2019.
Gain on contract termination of $1.0 million for the nine-month period ended September 30, 2020 relates to the amount received following the termination agreement for the cancellation of the sale of M/V Fortune Bay with an unaffiliated third party.
Depreciation cost amounts to $6.1 million and was impacted downwards due to fleet reduction from 18 vessels in the nine-month period of 2019 to 16 vessels in the same period in 2020.
Interest and finance cost decreased by 38.7% when compared to the same period in 2019, from $4.4 million to $2.7 million, positively affected from lower Libor rates and reduced loan balances.
Cash Flow Review: Nine months ended September 30, 2020
Cash and cash equivalent, including restricted cash decreased by $5.5 million as at September 30, 2020 and amounted to $21.8 million as compared to $27.3 million as at December 31, 2019.
The decrease is attributable to $28.2 million cash used in financing activities partially offset with $1.6 million cash provided by operating activities and $21.1 million cash provided by investing activities.
Cash flow activities highlights during the nine-month period include:
- $20.2 cash inflow from vessels disposal completed within nine-month period
- $20.6 million scheduled loan repayments and prepayments due to vessels sales, and
- $7.6 million dividend distribution