FUZHOU, China, Nov. 10, 2014 /PRNewswire/ -- Pingtan Marine Enterprise Ltd. (Nasdaq: PME), ("Pingtan," or the "Company") a global fishing company based in the People's Republic of China (PRC), today announced its financial results for the third quarter and nine months ended September 30, 2014.

SIGNIFICANT EVENTS

The Company's significant events for the quarter ended September 30, 2014 and subsequent weeks are as follows:

• September 3, 2014: The Company announced the appointment of BDO China Shu Lun Pan Certified Public Accountants LLP ("BDO China") as the Company's independent registered public accountants for the year ended December 31, 2014.
• September 24, 2014: The Company announced that its Board of Directors has decided that the Company will begin paying a quarterly dividend of $0.01 per share, and declared a cash dividend of $0.01 per share of common stock outstanding, payable in cash on or about November 14, 2014 to shareholders of record on October 6, 2014. 
• November 6, 2014: The Company announced a restatement to its annual financial statements for the year ended December 31, 2013 and 2012, and consequently its comparative consolidated interim financial statements for period ended March 31, 2014 and 2013, and June 2014 and 2013.

Third Quarter 2014 Financial Highlights (all results are compared to restatement of the Company unaudited consolidated financial statements prior year period)

• Revenue from continuing operations ("fishing business") increased 164.0% to $54.4 million from $20.6 million, primarily due to an increase in sales volume as a result of a larger fleet and an increase in the number of vessels.
• Gross profit increased 102.9% to $15.5 million from $7.6 million, and gross margin was 28.5% compared to 37.0%, due to the increase in fuel cost and the maintenance fee for fishing vessels and the increase in labor cost.
• Net income from the fishing business increased 181.4% to $14.2 million, or $0.18 per ordinary share (basic and diluted), from $5.0 million, or $0.06 per ordinary share (basic and diluted). 

Third Quarter 2014 Operational Highlights

• July 2014: The Company announced it has finalized its previously announced joint venture, known as Global Deep Ocean Fishing (Pingtan) Industrial Limited Company, with China Co-op (Hainan) Industry Development Co., Ltd. and Yantai Hengyu Trading Limited. The joint venture, will process, cold storage, and transport deep-ocean fishing products. The two companies under this joint venture will be constructing a fishing processing plant in Fujian Province as soon as all permits are obtained, and will establish selling branches to distribute its fishing products to end markets directly across China. 
• October 2014: The Company announced 3 newly-built fishing vessels were delivered to the Company in September.  Each of these vessels is capable of harvesting about 2000 tons annually, and the Company's total current fleet has increased to 129 vessels. These vessels have been placed into the sea for testing with an expected run-in period of 3 - 6 months prior to full operation, and the Company expects these vessels to be in full operation at the beginning of the second quarter of 2015.
• As of September 30, 2014: Pintan operated 129 vessels during the period. The Company owns 107 trawlers and 2 drifters and has exclusive operating license rights to 20 drifters.
• Sales volumes in the third quarter of 2014 rose by 143.0% to 15,868,029 kg from 6,530,603 kg in the same period of 2013.

Mr. Xinrong Zhuo, Chairman and CEO of the Company, commented, "We are pleased to continue delivering strong operating results and have achieved triple digit percentage growth for revenue and net income in the third quarter of 2014, which resulted from a 143.0% increase in the sales volumes and increased production capacity attributable to the expansion of our fleet. In September, We further expanded our fleet to 129 vessels through the addition of three new vessels with twice the catching capacity compared to our other trawlers. These vessels have been placed into sea for testing for 3-6 months to go through their initial run-in period, and are fully licensed to fish Indonesian waters. At full operation, each of these three vessels will be capable of harvesting about 2000 tons of fish annually, and we anticipate these new vessels to be in full operation at the beginning of the second quarter of 2015. We believe our long-term investment with China Co-op supports and directs Pingtan to diversify our revenue source and to achieve our goal to sell our products to the end market. Our management team and entire team at Pingtan remain dedicated to building an industry leading position, and committed to delivering significant growth to our investors."

Third Quarter 2014 Selected Financial Highlights

Balance Sheet Highlights

*Consolidated financial statements reflect the restatement of the Company unaudited consolidated financial statements for the three and nine months ended September 30, 2013.

Consolidated Financial and Operating Review

Revenues

Revenues from the fishing business for the three months ended September 30, 2014 increased by 164.0% to $54.4 million from $20.6 million for the same period in 2013. 

Sales increased primarily as a result of the addition of 66 fishing vessels in June and September 2013, which operated at full capacity in the current period; and the addition of 20 new fishing vessels acquired from Hong Long in December 2013, which began operating in the first quarter of 2014. The average unit selling price increase 8.5% in the third quarter of 2014 compared to the third quarter of 2013.

Sales volume in the third quarter of 2014 rose by 143.0% to 15.9 million kg from 6.5 million kg in the same period of 2013.  The Company's top 6 species of fish sold included: Indian white shrimp, Ribbon fish, Spanish mackerel, Black pomfret, Croaker fish, and Conger eel accounted for about 79.1% of revenue for the three months ended September 30, 2014.

For the nine months ended September 30, 2014, the Company's revenues increased by 187.0% to $176.9 million from $61.6 million in the first nine months of 2013. The increase was primarily due to higher sales volume as a result of the addition of vessels in 2013, in addition to increases in average unit selling price.

Sales volumes for the nine months ended September 30, 2014, increased by 153.3% to 57.8 million kg from 22.8 million kg in the same period of 2013.  The average unit selling price increased 13.3% the nine months ended September 30, 2014 compared to the same period of 2013.

Gross Margin

The Company's gross margin for its fishing business decreased to 28.5% for the three months ended September 30, 2014, from 37.0% in the prior year period.  The decrease was due to the increase in fuel cost and maintenance fees for fishing vessels and an increase in labor cost.

For the nine months ended September 30, 2014, gross margin slightly decreased to 33.1% from 36.1% in the same period of 2013, the decrease was due to the same reasons described above.

Selling Expense

For the three months ended September 30, 2014, selling expense for the fishing business was $0.68 million, or 1.2% of revenue, compared to $0.36 million, or 1.8% of revenue, in the prior year period. The increase was mainly due to business expansion resulting in an increase in storage fees, shipping and handling fees, insurance and other selling expenses consisting of customer services charges, inspection and examination of fishing vessels and advertising expense.

For the nine months ended September 30, 2014, total selling expense increased to $1.9 million from $0.73 million in the same period of 2013.

General & Administrative Expense

For the three months ended September 30, 2014, general and administrative expense for the fishing business was $0.83 million, or 1.5% of revenue, compared to $1.2 million, or 5.7% of revenue, in the prior year period. The decrease was mainly due to business expansion resulted in increase in compensation and related benefits, travel and entertainment expenses, rent and related administrative service charge, offsets by decrease in professional fees associated with the company being a publicly listed company.

For the nine months ended September 30, 2014, total general and administrative expense increased to $2.4 million from $2.3 million in the same period of 2013.

Net Income

Net income from the fishing business for the three months ended September 30, 2014 was $14.2 million, or $0.18 per ordinary share (basic and diluted), compared to $5.0 million, or $0.06 per ordinary share (basic and diluted), in the same period of 2013. The increase was primarily due to the same reasons described above.

For the nine months ended September 30, 2014, the Company's net income from the fishing business was $52.4 million, or $0.66 per ordinary share (basic and diluted), compared to $17.3 million, or $0.22 per ordinary share (basic and diluted), in the same period of 2013.

Outlook for 2014

Based on its current fleet capacity, strong demand for fishing products in China and its continued efforts in building market share, the Company reiterated the 2014 net income guidance of between $82 and $87 million, which the Company raised from $80 and $85 million following its second quarter 2014 financial results press release. 

Chairman Zhuo concluded, "As the demand for deep ocean seafood continuous to increase, Pingtan has benefitted and is working on increasing its production capacity. In addition, the competitive environment in our industry remains favorable due to high barriers to entry associated with the Ministry of Agriculture that restricted the issuance of new fishing licenses in the Arafura Sea in Indonesia during 2013.  We are confident in achieving our 2014 net income guidance of between $82 and $87 million and will stay focused on delivering high quality deep ocean catches and building a leading position in China's Seafood industry."

Restatements

The Company restated its previously issued annual financial statements for the years ended December 31, 2013 and 2012, and for the periods ended March 31, 2014 and 2013, and June 2014 and 2013 primarily to reflect 20 fishing vessels leased from a related party pursuant to an operating lease rights agreement at historical cost in property, plant and equipment, clarify certain disclosures, and record other miscellaneous adjustments such as the reclassification of certain balance sheets items and adjustments to depreciation and amortization expense. This restatement had the effect of reducing total assets by $188 million and stockholder's equity by $187 million at December 31, 2013.

The restatement had a positive impact on the consolidated statement of income for all affected periods.  For the year ended December 31, 2013, net income from continuing operations increased by approximately $1.6 million, or $0.01 per basic and diluted share, to $47.1 million, or $0.60 per basic and diluted share.

These restatements are more fully described in a Form 8-K filing that the Company filed on November 10, 2014 with the Securities and Exchange Commission.

Conference Call Details

Pingtan also announced that it will discuss financial results in a conference call on November 11, 2014, at 9:00 AM ET.

The dial-in numbers are:

To listen to the live webcast, please go to http://www.ptmarine.com and click on the conference call link at the top of the page, or go to: http://ptmarine.equisolvewebcast.com/q3-2014. This webcast will be archived and accessible through the Company's website for approximately 30 days following the call.

About Pingtan Marine

Pingtan is a global fishing company, engaging in ocean fishing through its wholly-owned subsidiary, Fujian Provincial Pingtan County Ocean Fishing Group Co., Ltd., or Pingtan Fishing.  Pingtan Fishing primarily engages in ocean fishing with many of its self-owned vessels operating within the Indian Exclusive Economic Zone and the Arafura Sea of Indonesia. Pingtan Fishing is a growing fishing company and provider of high quality seafood in the PRC.

Business Risks and Forward-Looking Statements

This press release may contain forward-looking statements that are subject to the safe harbors created under the Securities Act of 1933 and the Securities Exchange Act of 1934. Readers are cautioned that actual results could differ materially from those expressed in any forward-looking statements. In addition, please refer to the risk factors contained in Pingtan's SEC filings available at www.sec.gov, including Pingtan's most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Definitive Proxy Statement. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made. Pingtan undertakes no obligation to update or revise any forward-looking statements for any reason.

Contact:
Roy Yu
Chief Financial Officer
Pingtan Marine Enterprise Ltd.
Tel: +86 591 87271753
[email protected]

INVESTOR RELATIONS:
The Equity Group Inc.
Katherine Yao, Associate
86 10 6587 6435
[email protected]

SOURCE Pingtan Marine Enterprise Ltd.