Pyxis Tankers Inc., an international pure play product tanker company, today announced its unaudited results for the three and six month periods ended June 30, 2022.
Summary
For the three months ended June 30, 2022, our Revenues, net were $16.1 million. For the same period, our time charter equivalent (“TCE”) revenues were $11.3 million, representing an increase of approximately $7.2 million or 173.2% over the comparable period in 2021. Our net income attributable to common shareholders for the three months ended June 30, 2022 was $4.6 million, representing an increase of $6.1 million from a loss of $1.5 million in the comparable period of 2021. For the second quarter of 2022, the income per share was $0.43 basic and $0.38 diluted compared to loss $0.16 (basic and diluted) for the same period in 2021. Our Adjusted EBITDA for the three months ended June 30, 2022 was $7.3 million, which represented an increase of $6.9 million over the comparable period in 2021. Please see “Non-GAAP Measures and Definitions” below.
On May 13, 2022, the Company implemented a one for four reverse stock split with Nasdaq’s intent of complying with the minimum bid price requirement, as further discussed below. The share and per share information for all periods presented has been adjusted to reflect the one for four Reverse Stock Split.
Valentios Valentis, our Chairman and CEO commented:
“We are pleased to report record results of Revenue, net of $16.1 million and Net Income of $4.6 million for our second fiscal quarter in 2022. Starting this spring, historically low inventories of petroleum products coincided with the war in the Ukraine and expanding global demand, especially for transportation fuels, resulted in market dislocation, including arbitrage opportunities, ton-mile expansion of cargoes and substantially higher charter rates for product tankers. We have taken advantage of improving market conditions by continuing to employ our five Eco- MR’s under a mixed chartering strategy of short-term time charters and spot voyages. During the three months ended June 30, 2022, our daily TCE rate more than doubled to $26,270 compared to the same period in 2021. As of August 5th, 56.7% of the available days in Q3, 2022 for our MR’s were booked at an estimated average TCE of $30,500 per vessel, including three vessels contracted under short-term time charter at an average rate of $25,000 and two MR’s employed in the spot market at an average rate of $43,900.
While we continue to have a positive outlook based on the current environment and longer-term sector fundamentals, we do have concerns about the impact of rising global inflation, higher interest rates, possible recession and, of course, the ongoing war. For example, record high prices in mid-June for regular gasoline in the U.S. have subsequently led to an 3.5% decline in consumption by late July and a 13.5% reduction in the average price per gallon at the pump. However, U.S. refineries are currently running at approximately 93% utilization, 1.5 points higher than one year ago, in order to meet seasonal domestic demand and increased exports of diesel to Europe and Latin America.
Tanker values have risen significantly, increasing the value of our vessels, but also making potential acquisitions more expensive. It has become very challenging to develop opportunities for fleet expansion, especially for the purchase of modern eco-efficient MR’s. For example, based on strong near-term charter rate estimates, a leading research firm recently forecasted a further 20% appreciation in the price of a 5 year old MR to $40.2 million by the middle of next year. Consequently, we will continue to be very disciplined in allocating capital for any strategic transaction in order to maximize shareholder value. In the meantime, we expect to continue to use free cash flow to enhance our balance sheet.”
Results for the three months ended June 30, 2021 and 2022
For the three months ended June 30, 2022, we reported Revenues, net of $16.1 million, or 222.1% higher than $5.0 million in the comparable 2021 period. Our net income attributable to common shareholders was $4.6 million, or $0.43 basic and $0.38 diluted income per share, compared to a net loss of $1.5 million, or $0.16 basic and diluted loss per share, for the same period in 2021. The weighted average number of basic share count had increased by 1.3 million shares from the second quarter of 2021 to approximately 10.6 million common shares in the same period of 2022. The average daily MR TCE rate during the second quarter of 2022 was $26,270 or 107% higher than the $12,697 daily MR TCE rate for the same period in 2021, due to improved market conditions. During the second quarter of 2022, two of our MR’s were under short-term charters and three under spot voyages. Operating expenses and vessel management fees were comparatively higher in the first half of 2022 as a net result of the vessel additions in the second half of 2021, the “Pyxis Karteria” and “Pyxis Lamda”, which was offset by the two small tanker sales, the “Northsea Alpha” and “Northsea Beta” which were delivered to their buyer on January 28, 2022, and March 1, 2022, respectively. Our Adjusted EBITDA increased by $6.9 million to $7.3 million for the three months ended June 30, 2022.
Results for the six months ended June 30, 2021 and 2022
For the six months ended June 30, 2022, we reported Revenues, net of $23.0 million, an increase of $12.7 million, or 124.6%, from $10.2 million in the comparable period of 2021 primarily due to higher spot market rates. During the first half of 2022, two of our MR’s were contracted under short-term charters, two were employed in the spot market and one MR vessel contracted under short-term charter for 34 days and employed in the spot market for the rest of the period resulting in an overall MR daily TCE rate for our fleet of $19,814.
Our net income attributable to common shareholders for the six months ended June 30, 2022, was $0.9 million, or $0.09 per share (basic and diluted), compared to a net loss of $3.6 million, or a loss of $0.43 per share (basic and diluted) for the same period in 2021. Higher MR daily TCE rate of $19,814 and lower MR fleet utilization of 84.7% for our MR’s during the six months ended June 30, 2022, were compared to a MR daily TCE rate of $12,718 and MR fleet utilization of 99.3%, respectively, during the same period in 2021. Operating expenses and vessel management fees were comparatively higher in the first half of 2022 as a net result of the vessel additions of the “Pyxis Karteria” and “Pyxis Lamda” in the second half of 2021 offset from the sales of the two small tankers during the first part of 2022. Our Adjusted EBITDA of $6.6 million represented an increase of $5.4 million from $1.2 million for the same six month period in 2021.
Management’s Discussion and Analysis of Financial Results for the Three Months ended June 30, 2021 and 2022
(Amounts are presented in million U.S. dollars, rounded to the nearest one hundred thousand, except as otherwise noted)
Amounts relating to variations in period–on–period comparisons shown in this section are derived from the unaudited interim consolidated financials presented below.
Revenues, net: Revenues, net of $16.1 million for the three months ended June 30, 2022, represented an increase of $11.1 million, or 222.1%, from $5.0 million in the comparable period of 2021 as a result of significantly higher charter rates and higher spot employment for our MR’s, a 249-day increase in spot operating days, from nil days during the same period in 2021. This increase in Revenues, net was partially offset by a decrease of 3.8% in fleet utilization from 98.5% in the same period of 2021 to 94.7% for the three months ended June 30, 2022. In the second quarter of 2022, our MR daily TCE rate for our fleet was $26,270, a $13,573 per day increase from the same in 2021 period as a combined result of the improvement in charter rates and the $3.9 million increase in the voyage related costs and commissions discussed below.
Voyage related costs and commissions: Voyage related costs and commissions of $4.7 million in the second quarter of 2022, represented an increase of $3.9 million, or 463.0%, from $0.8 million in the same period of 2021. This increase was substantially due to the 249-day increase in our MR’s spot employment as well as significantly higher bunker fuel costs. Under spot charters, all voyage expenses are typically borne by us rather than the charterer and an increase in spot employment results in increased voyage related costs and commissions.
Vessel operating expenses: Vessel operating expenses of $3.0 million for the three months ended June 30, 2022, represented an increase of $0.1 million, or 4.2%, compared to the same period in 2021 which was mainly attributed to the addition of the “Pyxis Karteria” and “Pyxis Lamda” to our fleet in the second half of 2021, partially offset by the sales of “Northsea Alpha” and “Northsea Beta” which occurred during the first quarter of 2022. Fleet ownership days for the three months ended June 30, 2022 and 2021 was 455 days for both periods.
General and administrative expenses: General and administrative expenses of $0.7 million for the quarter ended June 30, 2022 were 20.5% higher than the same period in 2021 primarily due to higher professional fees.
Management fees: For the three months ended June 30, 2022, management fees were paid to our ship manager, Pyxis Maritime Corp. (“Maritime”), an entity affiliated with our Chairman and Chief Executive Officer, Mr. Valentis,and to International Tanker Management Ltd. (“ITM”), our fleet’s technical manager, overall increased by 13.1% from $0.3 million to $0.4 million as a result of the vessel additions in our fleet and the increase in the daily management fee paid to Maritime which increases annually in line with the inflation in Greece.
Amortization of special survey costs: Amortization of special survey costs of $0.1 million for the quarter ended June 30, 2022, remained flat compared to the same period in 2021.
Depreciation: Depreciation of $1.5 million for the quarter ended June 30, 2022, increased by $0.4 million or 37.9% compared to $1.1 million in the same period of 2021. The increase was attributed to the acquisition of vessels “Pyxis Karteria” and “Pyxis Lamda” after the second half of 2021 partly offset by the seizure of depreciation for vessels “Northsea Alpha” and “Northsea Beta” which were classified as held for sale at the end of 2021.
Gain from financial derivative instruments : During the three months ended June 30, 2022, we recorded a gain from financial derivative instruments amounted to $0.1 million related to the valuation of the interest rate cap purchased in July 2021, for the amount of $9.6 million at a cap rate of 2% with a termination date of July 8, 2025.
Interest and finance costs, net: Interest and finance costs, net, for the quarter ended June 30, 2022, were $1.0 million, compared to $0.6 million in the comparable period in 2021, an increase of $0.3 million, or 56.8%. This increase was primarily attributable to higher debt balances accompanying the acquisition of vessels “Pyxis Karteria” and “Pyxis Lamda” after the second quarter of 2021 and higher LIBOR rates paid on all the floating rate bank debt.
Management’s Discussion and Analysis of Financial Results for the Six Months ended June 30, 2021 and 2022
(Amounts are presented in million U.S. dollars, rounded to the nearest one hundred thousand, except as otherwise noted)
Amounts relating to variations in period–on–period comparisons shown in this section are derived from the unaudited interim consolidated financials presented below.
Revenues, net: Revenues, net of $23.0 million for the six months ended June 30, 2022, represented an increase of $12.7 million, or 124.6%, from $10.2 million in the comparable period of 2021 as a result of significantly higher spot market rates and greater spot employment for our MR’s, a 377-day increase in spot operating days, from 4 days during the same period in 2021. The increase in Revenues, net was partially offset by a decrease of 14.6% in fleet utilization from 99.3% in the same period of 2021 to 84.7% for the six months ended June 30, 2022. In the first half of 2022, our MR daily TCE rate for our fleet was $19,814, a $7,096 per day increase from the same 2021 period as a result of the improvement in charter rates and the $6.0 million increase in the voyage related costs and commissions discussed below.
Voyage related costs and commissions: Voyage related costs and commissions of $7.8 million for the six months ended June 30, 2022, represented an increase of $6.0 million, or 332.5%, from $1.8 million in the same period in 2021. For the six months ended June 30, 2022, our MRs were on spot charters for 381 days in total, compared to 4 days for the respective period in 2021. This higher spot chartering activity for our MRs contribute higher voyage costs which are typically borne by us rather than the charterer, thus an increase in spot employment results in increased voyage related costs and commissions.
Vessel operating expenses: Vessel operating expenses of $6.3 million for the six months ended June 30, 2022, represented a $1.0 million or 18.4% increase compared to $5.3 million for the six months ended June 30, 2021. This increase mainly attributed to the addition of the “Pyxis Karteria” and “Pyxis Lamda” to our fleet in the second half of 2021, partially offset by the sales of “Northsea Alpha” and “Northsea Beta” which occurred during the first quarter, 2022. Fleet ownership days for the six months ended June 30, 2022 was 991 days compared to 901 days for the same period in 2021.
General and administrative expenses: General and administrative expenses of $1.3 million for the six months ended June 30, 2022, represented an increase of 7.0%, from the comparable period in 2021, due to timing of certain incurred costs.
Management fees: For the six months ended June 30, 2022, management fees payable to Maritime and ITM of $0.9 million in the aggregate, represented an increase of $0.2 million compared to the six months ended June 30, 2021, as a result of the vessel additions in our fleet and the increase in the daily management fee paid to Maritime which increases annually in line with the inflation in Greece.
Amortization of special survey costs: Amortization of special survey costs of $0.2 million for the six months ended June 30, 2022, remained flat compared to the same period in 2021.
Depreciation: Depreciation of $3.0 million for the six months ended June 30, 2022, increased by $0.8 million or 37.8% compared to $2.2 million in the comparable period of 2021. The increase was attributed to the acquisition of vessels “Pyxis Karteria” and “Pyxis Lamda” after the second quarter of 2021 partly offset by the seizure of depreciation for vessels “Northsea Alpha” and “Northsea Beta” which were classified as held for sale at the end of 2021.
Loss from the sale of vessels, net: During the six months ended June 30, 2022, we recorded a non-recurring loss from the sale of the “Northsea Alpha” and “Northsea Beta” of $0.5 million related to the reposition costs for the delivery of the vessels to their buyer on January 28, 2022 and March 1, 2022, respectively. No such expense was recorded for the comparable period in 2021.
Loss from debt extinguishment: In the first six months of 2022, we recorded a loss from debt extinguishment of approximately $34,000 reflecting the write-off of the remaining unamortized balance of deferred financing costs, which were associated with the repayment of the “Northsea Alpha” and “Northsea Beta” loans during the first quarter of 2022. For the six months ended June 30, 2021 we recorded a loss from debt extinguishment of $0.5 million primarily reflecting a prepayment fee and the write-off of the remaining unamortized balance of deferred financing costs, both of which were associated with the loan on the “Pyxis Epsilon” that was refinanced at the end of the first quarter in 2021.
Gain from financial derivative instruments : During the six months ended June 30, 2022, we recorded a gain from financial derivative instruments amounted to $0.3 million related to the valuation of the interest rate cap purchased in July 2021, for the amount of $9.6 million. No such income or expense was recorded for the comparable period in 2021.
Interest and finance costs, net: Interest and finance costs, net, was $1.8 million for both the six months ended June 30, 2022 and 2021. Higher funded debt accompanying the acquisition of the “Pyxis Karteria” and “Pyxis Lamda” was offset by lower weighted average interest rate of 4.3% compared to 5.9% for the same period in 2021.
Source: Pyxis Tankers