SOURCE: Pioneer Marine Inc.

December 09, 2014 13:00 ET

Pioneer Marine Inc. Announces Third Quarter 2014 Results

MAJURO, MARSHALL ISLANDS--(Marketwired - Dec 9, 2014) - Pioneer Marine Inc. (OSLO-OTC: PNRM) ("Pioneer Marine," or the "Company"), a leading shipowner and global drybulk handysize transportation service provider, announced its unaudited financial and operating results for the third quarter ended September 30, 2014.

Third Quarter 2014 Financial Highlights:

  • For the third quarter 2014, the Company reported a net loss of $5.0 million, or $0.22 basic and diluted loss per share, as compared to a loss of $2.5 million or $0.11 basic and diluted loss per share for the second quarter of 2014.

Recent Events

  • During the third quarter, Pioneer drew down on a $47.4 million facility with CIT Finance LLC and on a $72 million facility with ABN AMRO Bank N.V. and DVB Bank Ltd. to partially refinance the purchase price of thirteen vessels.

  • On November 20, 2014, ABN AMRO Bank N.V. committed to participate, subject to the satisfaction of certain conditions, as one of the lenders to a Senior Secured Facility of up to $156.6 million for the purpose of financing our newbuilding program. ABN AMRO will also act as Bookrunning Mandated Lead Arranger to the facility. The facility will be for 12 newbuildings and will be partly covered by a Sinosure guarantee. Pioneer expects to receive further commitments from other participating banks within the upcoming weeks.

  • During the third quarter of 2014 the Company made progress payments of $17.3 million relating to eight hulls delivering in 2015 and 2016.

Pankaj Khanna, Chief Executive Officer, commented, "We are pleased with the arrangement of the debt facility for our Green Dolphin newbuildings and appreciate the support provided by our banks as we continue to grow.

"Pioneer has now built a Handysize focused operating platform and is among the top 15 Handysize owners. We are positioned to consolidate this fragmented sector further with like-minded operators and financial sponsor backed companies. The benefits of scale are most evident for smaller vessels as operational synergies, access to cargo and capital is available for the larger, well capitalized companies with modern fleets.

"The return of volatility in the drybulk freight market for the larger vessels signifies a supply-demand equation that appears to be coming back into balance after four years of over-supply. The market recovery has been delayed due to the 7% decline seen in Chinese coal imports (Jan-Sep 2014 versus prior period) precipitated by a 24% surge in hydro-electric production in the same period. However, forecasts for 2015 suggest that Chinese coal imports may rebound as hydro-electric production returns to more normal levels. The demand for minor bulk has been negatively impacted during 2014 by the ban on Indonesian exports of unprocessed mineral, however, we are now seeing long-haul trades of bauxite from West Africa and elsewhere to China, as stocks built in anticipation of the ban are rundown. Overall drybulk demand forecasts for 2015 are still in the 5-7% range based on volume alone and not accounting for the tonne-mile effect for example from rising Brazilian iron ore exports. We remain cautiously optimistic about the prospects for 2015."

Financial Review: Third quarter of 2014

Net revenue for the three month ended September 30, 2014 amounted to $11.1 million as compared to $12.2 million in the three months period ended June 30, 2014, decreased by $1.1 million or 8.7%. The number of operating days in the third quarter of 2014 increased to 1,182.5 days as compared to 1,138.8 days in the second quarter of 2014 and 573.5 operating days in the first quarter of 2014. During first quarter of 2014 eight vessels were added to the existing operating fleet of four vessels and during second quarter MV Jupiter Bay was delivered to us, increasing the total operating fleet to 13 vessels at the end of the second and third quarter.

Time Charter Equivalent ("TCE") revenue (Net Revenue less Voyage Expenses) amounted to $6.8 million in the three month period ended September 30, 2014 as compared to $7.5 million in the three month period ended June 30, 2014. TCE per day for the three month period ended September 30, 2014 amounted to $5,712, while for the three month period ended June 30, 2014 amounted to $6,551.

Vessel Operating Expenses ("OPEX") increased by $0.5 million for the three month period ended September 30, 2014 to $6.9 million as compared to $6.4 million in the three month period ended June 30, 2014, partially due to the increased fleet size and consequently increased ship days of the fleet. Daily OPEX increased to $5,749 per day in the three month period ended September 30, 2014 as compared to the three month period ended June 30, 2014 that amounted to $5,519.

General and Administration Expenses increased by $0.4 million for the three month period ended September 30, 2014 to $1.3 million as compared to $0.9 million in the three month period ended June 30, 2014 mainly due to increased professional fees and increased headcount.

Interest expense and finance cost, net incurred during the three month period ended September 30, 2014 amounted to $0.9 million and relates to bank loan interest of $0.9 million, amortization of deferred finance fees and other finance charges of $0.2 million partially offset with interest of $0.3 million capitalised to vessels under construction.

Fleet List as of September 30, 2014

                 
    Type   DWT   Year Built   Delivery Date (1)
                 
Current fleet:            
Reunion Bay   Handysize   32,354   2006   Nov 1, 2013
Paradise Bay   Handymax   46,232   2003   Nov 11, 2013
Eden Bay   Handysize   28,342   2008   Dec 2, 2013
Fortune Bay   Handysize   28,671   2006   Mar 4, 2014
Mykonos Bay   Handysize   32,411   2009   Dec 2, 2013
Emerald Bay   Handysize   32,258   2008   Jan 27, 2014
Azure Bay   Handysize   31,700   2005   Mar 10, 2014
Teal Bay   Handysize   32,327   2007   Jan 17, 2014
Calm Bay   Handysize   37,534   2006   Mar 4, 2014
Ha Long Bay   Handysize   32,311   2007   Feb 14, 2014
Jupiter Bay   Handysize   29,997   2012   Apr 22, 2014
Venus Bay   Handysize   30,003   2012   Mar 31, 2014
Orion Bay   Handysize   30,009   2012   Mar 25, 2014
                 
Vessels under construction:            
GY311(2)   Handysize   38,800   -   2015
GY312(2)   Handysize   38,800   -   2015
GY313(2)   Handysize   38,800   -   2015
GY314(2)   Handysize   38,800   -   2015
GY315(2)   Handysize   38,800   -   2015
GY316(2)   Handysize   38,800   -   2015
GY317(2)   Handysize   38,800   -   2015
GY318(2)   Handysize   38,800   -   2015
GY319(2)   Handysize   38,800   -   2015
GY320(2)   Handysize   38,800   -   2015
GY321(2)   Handysize   38,800   -   2016
GY322(2)   Handysize   38,800   -   2016
SF130111(3)   Handysize   38,000   -   2016
SF130112(3)   Handysize   38,000   -   2016
                 
(1) Estimated year of completion for vessels under construction
(2) Green Dolphin Newbuilding being constructed by Yangzhou Guoyu Shipbuilding Co., LTD (Guoyu)
(3) Green Dolphin Newbuilding being constructed by Taizhou Sanfu Ship Engineering Co., LTD.
   

Summary of Operating Data (unaudited)
(US Dollars in Thousands, except per day, per share and number of days data)

                   
    Three months Ended
September 30, 2014
    Three Months Ended
June 30, 2014
    Three Months Ended
March 31, 2014
 
                   
Revenue, net   11,103     12,156     6,126  
Voyage expenses   (4,349 )   (4,695 )   (1,307 )
Time charter equivalent revenue   6,754     7,461     4,819  
                   
Vessel operating expense   (6,876 )   (6,414 )   (3,865 )
Drydock expense   -     -     (511 )
Depreciation expense   (2,729 )   (2,654 )   (1,511 )
General and administration expense   (1,308 )   (885 )   (594 )
Interest expense and finance cost   (874 )   -     -  
Interest income   17     -     -  
Other income/(expenses), net   12     (2 )   (1 )
Income and other taxes   (34 )   -     -  
                   
Net loss   (5,038 )   (2,494 )   (1,663 )
                   
Net loss per share in, basic and diluted   (0.22 )   (0.11 )   (0.09 )
                   
The following table reconciles net loss to EBITDA:                  
(US Dollars in thousands)                  
    Three months Ended
September 30, 2014
    Three Months Ended
June 30, 2014
    Three Months Ended
March 31, 2014
 
                   
Net loss   (5,038 )   (2,494 )   (1,663 )
Add: Depreciation expense   2,729     2,654     1,511  
Add: Interest expense and finance cost   874     -     -  
Add: Income and other taxes   34     -     -  
Less: Interest income   (16 )   -     -  
EBITDA(1)   (1,417 )   160     (152 )
                   
(1) EBITDA represents net income/(loss) before interest, taxes, depreciation and amortization and is used as a supplemental financial measure by management to assess our financial and operating performance. We believe that EBITDA assists our management and investors by increasing the comparability of our performance from period to period. We believe that including EBITDA as a financial and operating measure benefits investors in selecting between investing in us and other investment alternatives. EBITDA does not represent and should not be considered as an alternative to net income/(loss) or cash flow from operations, as determined by United States generally accepted accounting principles, or U.S. GAAP, and our calculation of EBITDA may not be comparable to that reported by other companies.
   
   
FLEET DATA (unaudited)                  
Vessel Utilization:   Three months Ended September 30, 2014     Three Months Ended
June 30, 2014
    Three Months Ended
March 31, 2014
 
  Ship days(2)   1,196.0     1,162.3     627.3  
  Off-hire days   13.5     23.5     28.9  
  Off-hire days due to dry-dock   -     -     24.9  
  Operating days (3)   1,182.5     1,138.8     573.5  
Fleet Utilization (4)   99 %   98 %   91 %
                   
TCE per day- $ (1)   5,712     6,551     8,403  
Opex per day- $   5,749     5,519     6,163  
                   
(1) Time Charter Equivalent, or TCE revenue, are non-GAAP measures. Our method of computing TCE revenue is determined by voyage revenues less voyage expenses (including bunkers and port charges). Such TCE revenue, divided by the number of our operating days during the period, is TCE per day, which is consistent with industry standards. TCE revenue is included because it is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company's performance irrespective of changes in the mix of charter types (i.e., spot charters and time charters), and it provides useful information to investors and management.
(2) Ship days: We define ship days as the aggregate number of days in a period during which each vessel in our fleet has been owned by us. Ship days are an indicator of the size of our fleet over a period and affect both the amount of revenues and the amount of expenses that we record during a period.
(3) Operating days: We define operating days as the number of our ship days in a period less days required to prepare vessels acquired for their initial voyage and off-hire days associated with off-hire while a vessel is employed, scheduled repairs, drydockings or special surveys. The Company uses operating days to measure the number of days in a relevant period during which vessels should be capable of generating revenues.
(4) Fleet utilization is defined as the ratio of operating days to ship days.
   
   

Condensed Consolidated Balance Sheets (Unaudited) 
(US Dollars in Thousands) 

         
As at   September 30, 2014   December 31, 2013
ASSETS        
Current assets        
Cash & cash equivalents   112,495   1,358
Trade accounts receivable & accrued income   3,570   586
Inventories   2,046   1,072
Other receivables   948   423
Total current assets   119,059   3,439
Non-current assets        
Vessels, net   221,957   68,170
Other fixed assets   165   75
Advances for vessel acquisition and vessels under construction   35,351   13,621
Restricted cash   5,340   -
Deferred financing costs   2,922   -
Total non-current assets   265,735   81,866
         
Total assets   384,794   85,305
LIABILITIES AND EQUITY        
Current liabilities        
Accounts payable and accrued liabilities   3,084   637
Deferred revenue   1,044   -
Current portion of long term debt   7,282   -
Total current liabilities   11,410   637
Non-current liabilities        
Long term debt   110,704
680
  -
-
Other non-current liabilities  
Total non-current liabilities   111,384   -
         
Shareholders'/ owners' equity   262,000   84,668
Total liabilities and shareholders' equity   384,794   85,305
         
         

Condensed Consolidated Statement of Cash Flows (Unaudited) 

(US Dollars in Thousands) 

     
  Nine Months September 30, 2014  
Cash flows from operating activities    
Net Loss (9,195 )
Adjustments to reconcile loss to net cash used in    
operating activities:    
  Depreciation 6,894  
  Amortization of deferred finance fees 177  
Changes in operating assets and liabilities (1,395 )
Net cash used in operating activities (3,519 )
     
Cash flows from investing activities    
  Acquisition of vessels (155,588 )
  Advances for vessel acquisitions and vessels under construction (26,751 )
  Purchase of other fixed assets (162 )
  Restricted cash (5,340 )
Net cash used in investing activities (187,841 )
     
Cash flows from financing activities    
  Loan proceeds, net of deferred finance cost 117,394  
  Loan repayments (1,424 )
  Cash contributions and proceeds from sale of shares 186,527  
Net cash provided by financing activities 302,497  
     
Net increase in cash and cash equivalents 111,137  
Cash and cash equivalents at the beginning of the period 1,358  
Cash and cash equivalents at the end of the period 112,495  
     
     

About Pioneer Marine Inc.

Pioneer Marine Inc. is a leading shipowner and global drybulk handysize transportation service provider. Pioneer Marine currently owns twelve Handysize and one Handymax drybulk carriers with an additional 14 Handysize newbuildings on order for delivery in 2015. The Handysize Green Dolphins newbuildings are 'Eco' vessels designed by SDARI.

Forward-Looking Statements

Matters discussed in this press release may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words "believe," "anticipate," "intends," "estimate," "forecast," "project," "plan," "potential," "may," "should," "expect," "pending" and similar expressions identify forward-looking statements.

The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, our management's examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.

In addition to these important factors, other important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the failure of counterparties to fully perform their contracts with us, the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand for dry bulk vessel capacity, changes in our operating expenses, including bunker prices, drydocking and insurance costs, the market for our vessels, availability of financing and refinancing, charter counterparty performance, ability to obtain financing and comply with covenants in such financing arrangements, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, vessels breakdowns and instances of off-hires and other factors.

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