Pyxis Tankers Inc., a growth-oriented pure play product tanker company, announced unaudited results for the three months and year ended December 31, 2021.
Summary
For the three months ended December 31, 2021, our Revenues, net were $8.1 million. For the same period, our time charter equivalent (“TCE”) revenues were $3.9 million, an increase of approximately $0.3 million or 8.7% from the comparable period in 2020. This increase was primarily due to 139 more operating days in our fleet which resulted from the addition of one medium range tanker (“MR”), higher fleet utilization counterbalanced by lower charter rates for our MR’s. Our net loss to common shareholders increased by $2.9 million to $5.6 million versus the comparable period in 2020. This larger loss was primarily due to higher costs, including the $2.4 million non-cash loss on vessels held-for-sale in the fourth quarter of 2021, which represented the sale of our two 2010 built 8,600 dwt product tankers, the “Northsea Alpha” and “Northsea Beta”, that closed earlier this current quarter. For the fourth quarter of 2021, loss per share (basic and diluted) was $0.14. Our Adjusted EBITDA was negative $0.7 million, which represented an increase of $0.5 million over the comparable period in 2020. Please see “Non-GAAP Measures and Definitions” below.
Valentios Valentis, our Chairman and CEO, commented:
“During the fourth quarter, 2021 we announced the acquisition of the “Pyxis Lamda”, a 2017 built eco-efficient MR, the debt refinancing of the “Pyxis Malou” and the non-core sales of the two small tankers, which finalized our planned operating and financial repositioning of the Company that commenced in January, 2020. During this very challenging chartering period of two years, we managed to raise over $36 million of equity capital, source almost $75 million in bank loans at lower interest costs, renew the fleet by selling three older vessels and acquiring two eco-efficient MR’s as well as undertake four special surveys. Moving forward, we have a modern fleet of five eco-MR’s, long-lived bank debt and a reasonable balance sheet. We believe the Company is situated to take advantage of better market conditions.
Historically depressed charter rates for the product tanker sector continued into the beginning of the fourth quarter, 2021. However, the traditional seasonal improvement of better activity was cut short by the COVID-19 variant, Omicron, which resulted in many adversities including the re-introduction of travel restrictions worldwide. Personal mobility was reduced which hurt demand for transportation fuels, a major portion of global cargoes. Fortunately, the personal and economic impact from Omicron has been considered mild. However, the delayed return to better chartering conditions now faces the added unpredictability from the effects of the hostilities in the Ukraine. We will do our best to navigate the unchartered waters ahead.
During the three-month period ended December 31, 2021, we reported an average TCE of $8,706 for our MR’s, substantially lower than the same period in the prior year. However, charter rates have rebounded from historical lows, and as of March 16th, our bookings for 83% of available days in the first quarter, 2022 are approximately $14,775, exclusive of charterer’s options. Over the balance of this year, we expect to continue our mixed chartering strategy of shorter-term time charters and spot employment, diversified by charterer and duration.
While we continue to be optimistic about the long-term fundamentals of the product tanker sector, the uncertainty surrounding demand growth is significant. Global inventories of many refined products are well below the five year averages, which is usually a positive indicator to rebuild stocks in order to meet demand. However, the International Monetary Fund’s forecast for global growth in GDP of 4.4% for 2022 is likely to be revised downward due to recent geopolitical events. Given these conditions, we expect increased charter rate volatility with an expansion of ton miles for the balance of 2022, which could lead to a wide range of spot charter rates worldwide. Nevertheless, the vessel supply picture is much clearer, as the orderbook for MR’s stood at 7.4% of the global fleet as of February 28, 2022, according to a leading independent research firm. New ordering continues to be very low as only two MR’s were ordered in the first two months of the year. Delays in the delivery of new build MR’s should continue given the overall size of ship yard backlogs and a five year historical slippage rate of 13.4% per year. In 2021, 33 MR’s were scrapped and with 116 vessels at 20 years of age or more, demolitions should continue at a brisk rate as 7 tankers have already been scrapped in the first two months of 2022. Consequently, we expect that net supply growth in 2022 and 2023 will run at approximately 2% per year.
We believe our experienced management team, solid operating platform, disciplined use of capital and stronger financial position should help us weather these uncertain times, and potentially create further opportunities to enhance shareholder value.”
Results for the three months ended December 31, 2020 and 2021
For the three months ended December 31, 2021, we reported a net loss to common shareholders of $5.6 million, approximately $2.9 million more than the loss in the comparable period in 2020. This decline was primarily a result of the non-cash loss on vessels held-for-sale of $2.4 million in the fourth quarter of 2021, the sales of which subsequently closed in early 2022. During the fourth quarter of 2021, our Revenues, net were $8.1 million or 79.6% higher compared to the same period in 2020, primarily as a result of higher utilization and increased spot employment for our MR tankers, which was offset from lower fleet-wide daily TCE rate of $7,972, a $2,262 per day decline from the comparable 2020 period due to poor charter rates and increased voyage related costs and commissions that amounted to $4.2 million, or $3.3 million higher compared with the same period in 2020. Furthermore, the addition of one MR in July 2021 and the special surveys of our small tankers completed during the fourth quarter of 2020, resulted in an aggregate increase of 139 operating days for the period, from 350 days during the fourth quarter of 2020 to 489 days in 2021. Adjusted negative EBITDA of $0.7 million represented an increase of $0.5 million from a negative $0.2 million in the same period of 2020.
Results for the years ended December 31, 2020 and 2021
For the year ended December 31, 2021, we reported a net loss to common shareholders of $12.9 million. Loss per share basic and diluted for the year ended December 31, 2021 was $0.36. In 2020, our net loss was $7.0 million with a loss per share basic and diluted of $0.32. In 2021, higher revenues, net of $3.6 million or 16.7%, compared to 2020 were mainly due to higher spot employment of our fleet and more available days due to the addition of one MR tanker in July 2021. This revenue increase was more than offset by an increase of $5.3 million in voyage related costs and commissions as a result of higher spot market employment. The aforementioned increase of voyage related costs as well as the poor market conditions resulted to lower daily TCE rate of our fleet with an average of $8,981 per day for the year ended December 31, 2021, compared to, $11,456 per day for the same period in 2020. Furthermore, the increase in our revenues, net, was also impacted by an aggregate net increase of approximately $2.5 million in vessel operating expenses, general and administrative expenses, management fees, depreciation and amortization which primarily reflected the addition of one vessel, the “Pyxis Karteria”. Moreover, in 2021, we recorded a loss from debt extinguishment of $0.5 million, which primarily reflected prepayment fees and the write-off of remaining unamortized balance of deferred financing costs associated with the loan refinancing of “Pyxis Malou” and “Pyxis Epsilon” during the year. Interest and finance costs, net in 2021 were reduced by $1.7 million due to the loan refinancing of the Eighthone and lower LIBOR rates paid on all the floating rate bank debt, despite the increase in the overall outstanding debt due to the acquisitions of “Pyxis Karteria” and “Pyxis Lamda”. Lastly, we recognized a $2.4 million non-cash loss on vessels held for sale in fourth quarter of 2021. Our adjusted negative EBITDA of $0.8 million represented a decrease of $3.5 million from $2.7 million for the same period in 2020.
Management’s Discussion and Analysis of Financial Results for the Three Months ended December 31, 2020 and 2021
(Amounts are presented in U.S. dollars, rounded to the nearest one hundred thousand, except as otherwise noted)
Revenues, net: Revenues, net of $8.1 million for the three months ended December 31, 2021, represented an increase of $3.6 million, or 79.6%, from $4.5 million in the comparable period of 2020 as a result of higher spot employment for our MR’s, a 94-day increase from 28 operating days in 2020 to 122 days during the same period in 2021 and the improved utilization achieved by the Company’s two small tankers of 99.5% compared to 65.1% in the previous year, achieving a higher TCE rate of $6,744 per day for the fourth quarter of 2021 compared with $4,722 in the same period of 2020. This aforementioned Revenues, net increase was partially counterbalanced by the decrease in the charter rates as a result of the prevailing market conditions in the two comparative periods. In Q4 2021, our daily TCE rate fleet-wide was $7,972, a $2,262 per day decline from the comparable 2020 period as a result of poor charter rates and the increase of $3.3 million of the voyage related costs and commissions discussed below.
Voyage related costs and commissions: Voyage related costs and commissions of $4.2 million in the fourth quarter 2021, represented an increase of $3.3 million, or 350.8%, from $0.9 million in the comparable period of 2020. This increase was primarily a result of a 94-day increase in spot employment and a decline in MR utilization to 83.2% for the three months ended December 31, 2021 from 92.2% in the comparable period of 2020, as well as substantially higher bunker fuel costs. Under spot charters, all voyage expenses are typically borne by us rather than the charterer and a decrease in time chartering results in increased voyage related costs and commissions.
Vessel operating expenses: Vessel operating expenses of $3.5 million for the three month period ended December 31, 2021, represented an increase of $0.6 million, or 21.3%, from $2.9 million in the comparable period of 2020, which was mainly attributed to the addition of the “Pyxis Karteria” as well as higher crewing costs significantly due to COVID-19 related measures.
General and administrative expenses: General and administrative expenses of $0.6 million for the fourth quarter, 2021 remained stable compared to 2020.
Management fees: For the three months ended December 31, 2021, management fees 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, increased by $0.1 million to $0.5 million as a result of one more vessel, versus the comparable period in 2020.
Amortization of special survey costs: Amortization of special survey costs of $0.1 million for the quarter ended December 31, 2021, represented an increase of 11.1%, compared to $90 thousand for the same period in 2020 primarily attributed to the additional amortization costs from the “Pyxis Epsilon”, “Northsea Alpha” and “Northsea Beta” special surveys in 2020.
Depreciation: Depreciation of $1.4 million for the quarter ended December 31, 2021, increased of $0.3 million or 22.8% compared to $1.1 million in 2020. The increase was attributed to the vessel additions during the year, mainly to the “Pyxis Karteria”.
Loss on vessels held-for-sale: The non-cash loss of $2.4 million for the quarter ended December 31, 2021, relates to the sales of the two small tankers “Northsea Alpha” and “Northsea Beta”, which met the criteria of being classified as held for sale as of December 31, 2021, and were subsequently closed on January 28, 2022 and March 1, 2022, respectively. There was no comparable amount in the year ended December 31, 2020.
Loss from debt extinguishment: On the fourth quarter of 2021, we recorded a loss from debt extinguishment of approximately $0.1 million reflecting a prepayment fee and the write-off of remaining unamortized balance of deferred financing costs, which are associated with the refinance of the “Pyxis Malou” loan at the end of the year. No such loss was recorded for the prior period.
Interest and finance costs, net: Interest and finance costs, net, for the quarter ended December 31, 2021, was $0.8 million, compared to $1.2 million in the comparable period in 2020, a decrease of $0.4 million, or 32.3%. This decrease was primarily attributable to lower interest costs derived from the refinancing on March 29, 2021, of the Pyxis Epsilon (“Eighthone”) loan. Additionally, despite the increase in the overall outstanding debt due to the two vessels acquired, “Pyxis Karteria” and “Pyxis Lamda”, the lower outstanding balance of the new Eighthone loan and lower LIBOR rates paid on all the floating rate bank debt helped reduce the overall interest expense compared to the same period in 2020.
Management’s Discussion and Analysis of Financial Results for the Years ended December 31, 2020 and 2021 (Amounts are presented in U.S. dollars, rounded to the nearest one hundred thousand, except as otherwise noted)
Revenues, net: Revenues, net, of $25.3 million for the year ended December 31, 2021, represented an increase of $3.6 million, or 16.7%, from $21.7 million in the comparable period in 2020, mainly as a result of higher spot employment for our MR’s. Our small tankers operated solely in the spot market during 2020 and 2021, whereas our MR tankers operated on spot and time charters during both periods. Our MR’s perform 183-day more days in spot market, from 58 operating days in 2020 to 241 days during the year ended December 31, 2021. Moreover, the Company’s two small tankers achieved improved utilization for 2021 of 81.5% compared to 69.5% in the previous year. This overall increase however, was counterbalanced by $5.3 million higher voyage related costs and commissions that are discussed below. Revenue from spot voyages in 2021 was $13.7 million, an increase of $6.7 million from $7.0 million in 2020. Time charter revenue decreased by 20.8%, or $3.1 million, to $11.6 million from $14.7 million in 2020. This decrease was primarily attributable to lower charter rates, as well as decreased time charter activity for our MR tankers at reduced TCE rates offset by increased operating days due to the “Pyxis Karteria” acquisition. Our total available days increased from 1,764 days in 2020 to 1,994 days in 2021, as a result of this acquisition and 54 fewer dry-dock days from 66 in 2020 to 12 in 2021.
Voyage related costs and commissions: Voyage related costs and commissions of $9.6 million for the year ended December 31, 2021, represented an increase of $5.3 million, or 124.7%, from $4.3 million in the comparable period in 2020. This increase was primarily a result of a 184-day increase in spot employment for our MRs from 57 days during 2020 to 241 days during 2021, and higher utilization of the two small tankers from 69.5% to 81.5% providing 113 more voyage charter days, as well as substantially higher bunker fuel costs. Under spot charters, all voyage expenses are typically borne by us rather than the charterer and a decrease in time chartering results in increased voyage related costs and commissions.
Vessel operating expenses: Vessel operating expenses of $12.5 million for the year ended December 31, 2021, represented an increase of $1.6 million, or 14.5%, from $10.9 million in the comparable period in 2020. This increase was mainly attributed to the addition of the “Pyxis Karteria” as well as higher crewing costs significantly due to COVID-19 related measures.
General and administrative expenses: General and administrative expenses of $2.5 million for the year ended December 31, 2021 were $0.2 million higher, or 6.7%, from $2.4 million in the comparable period 2020, primarily attributed to higher professional fees.
Management fees, related parties: Management fees to Maritime of $0.7 million for the year ended December 31, 2021, represented an increase of 12.4 % over the comparable period in 2020 or $0.1 million due to the “Pyxis Karteria” acquisition in July, 2021.
Management fees, other: Management fees, payable to ITM of $0.9 million for the year ended December 31, 2021, represented an increase of 4.0% which was attributed to the “Pyxis Karteria” acquisition in July, 2021.
Amortization of special survey costs: Amortization of special survey costs of $0.4 million for the year ended December 31, 2021, represented an increase of 60.5%, compared to $0.3 million for the same period in 2020 primarily attributed to the additional amortization costs from the special surveys of the “Pyxis Epsilon”, “Northsea Alpha” and “Northsea Beta” in 2020.
Depreciation: Depreciation of $4.9 million for the year ended December 31, 2021, increased $0.5 million or 10.9% compared to $4.4 million charged in 2020. The increase was due to the vessel additions during the year, mainly to the “Pyxis Karteria”.
Loss on vessels held-for-sale: The non-cash loss of $2.4 million for the year ended December 31, 2021, relates to the sales of the two small tankers “Northsea Alpha” and “Northsea Beta”, which met the criteria of being classified as held for sale as of December 31, 2021, and were subsequently closed on January 28, 2022 and March 1, 2022, respectively. There was no comparable amount in the year ended December 31, 2020.
Loss from debt extinguishment: During 2021 we recorded a loss from debt extinguishment of $0.5 million, which primarily reflected a prepayment fee and the write-off of remaining unamortized balance of deferred financing costs, of which $83 thousand was associated with the loan refinance of “Pyxis Malou” at the end of the fourth fiscal quarter of 2021 and $458 thousand associated with the “Pyxis Epsilon” that was refinanced at the end of first quarter of 2021. No such loss was recorded in 2020.
Interest and finance costs, net: Interest and finance costs, net, for the year ended December 31, 2021, was $3.3 million, compared to $5.0 million in the comparable period in 2020, a decrease of $1.7 million, or 33.8%. This decrease was primarily attributable to lower interest costs derived from the refinancing on March 29, 2021, of the Eighthone loan. Additionally, despite the increase in the overall outstanding debt due to the two vessels acquired, “Pyxis Karteria” and “Pyxis Lamda”, the lower outstanding balance of the new Eighthone loan and lower LIBOR rates paid on all the floating rate bank debt helped reduce the overall interest expense compared to the same period in 2020.
Source: Hellenic Shipping News
