Pyxis Tankers Inc. Expects Tanker Market Fundamentals Improving by Late 2017

TINNews

TIN news: Pyxis Tankers Inc., an emerging growth pure play product tanker company, today announced unaudited results for the three months ended March 31, 2017.

Summary

For the three months ended March 31, 2017, our time charter equivalent revenues were $4.7 million, which resulted in a net loss of $1.7 million, or a loss per share (basic and diluted) of $0.09, and our EBITDA (see “Non-GAAP Measures and Definitions” below) was $0.4 million.

We reached preliminary agreement to extend the maturity of approximately one-third of the outstanding principal of our debt until September 2022.

Valentios Valentis, our Chairman and CEO commented:

“Our results for the first quarter of 2017 reflected a continuation of a challenging chartering environment. Spot and period charter rates were volatile during the quarter but improved slightly overall, especially for modern eco-efficient tankers. Modest demand growth reduced high inventories of refined products in storage and improved voyage activity. However, we expect chartering activity to continue to be choppy for most of 2017, but believe in a longer term improvement starting in late 2017 due to attractive market fundamentals, such as, significantly lower scheduled deliveries of new build medium range tankers (“MRs”) combined with projected solid growth in consumption and export-oriented refinery cargoes. Consequently, we intend to continue to maintain our mixed chartering strategy. As of May 15, 2017, we had two vessels on time charter and the balance of our fleet on spot charters, which positions us to take advantage of improving rates when they occur.

“Overall, we continue to be pleased with our disciplined, cost-effective operating structure. For example, in the first quarter of 2017, we saw a fleet-wide improvement in our daily vessel operating expenses as compared to the same period in 2016.

“As of March 31, 2017, our net debt stood at $68.4 million, and the weighted average interest rate was approximately 3.5% during the first quarter of 2017. In May 2017, one of our lenders agreed, subject to execution of customary documentation, to extend the maturity of the loans with respect to two of our vessels, which represents approximately $25.0 million of our outstanding debt, for an additional four years to September 2022. Once this amendment is in place, the first scheduled balloon payment with respect to our bank debt will be due in the second quarter of 2020, which enhances our financial flexibility.

“As part of our strategic plan, Pyxis Tankers continues to focus on acquisition opportunities. The long-term economics are attractive for the acquisition of a quality second-hand MR2 with current vessel prices substantially below 10-year averages.”

Results for the three months ended March 31, 2016 and 2017

For the three months ended March 31, 2017, we reported a net loss of $1.7 million, or $0.09 basic and diluted loss per share, compared to a net income of $1.1 million, or $0.06 basic and diluted earnings per share, for the same period in 2016. For the first quarter of 2017, our EBITDA was $0.4 million, a decrease of $2.9 million from $3.3 million for the same period in 2016. The decrease in net income was primarily due to a $2.9 million decrease in time charter equivalent revenues.

Management’s Discussion and Analysis of Financial Results for the Three Months ended March 31, 2016 and 2017 (Amounts are presented in million U.S. dollars, rounded to the nearest one hundred thousand, except as otherwise noted)

Voyage revenues: Voyage revenues of $7.7 million for the three months ended March 31, 2017 represented a decrease of $0.7 million, or 8.7%, from $8.4 million in the comparable period in 2016. The decrease during the first quarter of 2017 was attributed to lower time charter equivalent rates as well as to a decrease in total operating days.

Voyage related costs and commissions: Voyage related costs and commissions of $3.0 million for the three months ended March 31, 2017 represented an increase of $2.2 million, or 273.4%, from $0.8 million in the comparable period in 2016. The increase was primarily attributed to greater spot charter activity which incurs voyage costs.

Vessel operating expenses: Vessel operating expenses of $3.0 million for the three months ended March 31, 2017 represented a decrease of $0.3 million, or 10.2%, from $3.3 million in the comparable period in 2016. The decrease was primarily attributed to our cost efficiencies from the two eco-efficient MR vessels.

General and administrative expenses: General and administrative expenses of $0.8 million for the three months ended March 31, 2017 increased by $0.1 million, or 16.5%, from $0.7 million in the comparable period in 2016, mainly due to an increase in other professional services.

Management fees, related parties: Management fees to our ship manager, Pyxis Maritime Corp., of $0.2 million for the three months ended March 31, 2017 remained relatively stable compared to the three-month period ended March 31, 2016.

Management fees, other: Management fees mainly payable to International Tanker Management Ltd., our fleet’s technical manager, of $0.2 million for the three months ended March 31, 2017 remained relatively stable compared to the three-month period ended March 31, 2016, which included the services of North Sea Tankers BV, the former commercial manager of Northsea Alpha and Northsea Beta.

Amortization of special survey costs: Amortization of special survey costs was less than $0.1 million for both three-month periods ended March 31, 2017 and 2016.

Depreciation: Depreciation of $1.4 million for the three months ended March 31, 2017 remained stable compared to the three-month period ended March 31, 2016.

Bad debt provisions: Bad debt provisions of $0.2 million for the three months ended March 31, 2017 represented an increase in doubtful account for trade receivables.

Interest and finance costs, net: Interest and finance costs, net, for the three months ended March 31, 2017 amounted to $0.7 million and remained relatively stable compared to the three-month period ended March 31, 2016.