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Pingtan Marine Enterprise Ltd. Reports Financial Results For The Third Quarter And Nine Months Ended September 30, 2014

Pingtan Marine Enterprise Ltd. Reports Financial Results For The Third Quarter And Nine Months Ended September 30, 2014

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Company to Hold Conference Call on November 11, 2014, at 9:00 AM ET

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

($ in millions, except per share data)

Three Months ended September 30,


2014

2013



(As Restated)*

Fishing Business (continuing operations)



Revenue

$54.4

$20.6

Cost of Revenue

39.0

13.0

Gross Profit

15.5

7.6

Gross Profit Margin

28.5%

37.0%

Net Income from  continuing operations

14.2

5.0

Basic and Diluted Weighted Average Shares Outstanding

79.1

79.1

EPS (from continuing operations)(in $)

$0.18

$0.06

Balance Sheet Highlights


9/30/2014

12/31/2013


(Unaudited)

(As Restated)


Cash and Cash Equivalents

$11.8

$8.2


Total Current Assets

65.5

30.7


Total Assets

234.6

170.1



Total Current Liabilities

74.1

50.8


Total Long-term Debt, net of current portion

44.7

54.5


Total Liabilities

118.8

105.3


Total Shareholders' Equity

115.8

64.8


Total Liabilities and Shareholders' Equity

234.6

170.1


Book Value Per Share (in $)

$1.46

$0.82


*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:

Live Participant Dial In (Toll Free):        

877-407-0310

Live Participant Dial In (International):      

201-493-6786

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
ryu@ptmarine.net

INVESTOR RELATIONS:
The Equity Group Inc.
Katherine Yao, Associate
86 10 6587 6435
kyao@equityny.com



 


PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(IN U.S. DOLLARS)












 For the Three Months Ended


For the Nine Months Ended



 September 30,


September 30,



2014


2013


2014


2013





 (As Restated)




(As Restated)










REVENUE









     Revenue

$

54,416,793

$

20,576,492

$

176,909,177

$

51,302,671

     Revenue - related party


-


32,615


-


10,338,269










        Total Revenue


54,416,793


20,609,107


176,909,177


61,640,940










COST OF REVENUE









     Cost of revenue


38,932,806


12,956,478


118,388,729


32,909,027

     Cost of revenue - related party


-


20,413


-


6,470,581










        Total Cost of Revenue


38,932,806


12,976,891


118,388,729


39,379,608










GROSS PROFIT


15,483,987


7,632,216


58,520,448


22,261,332










OPERATING EXPENSES:









     Selling


675,442


362,000


1,914,815


730,734

     General and administrative


828,530


1,178,033


2,407,370


2,345,569










        Total Operating Expenses


1,503,972


1,540,033


4,322,185


3,076,303










INCOME FROM OPERATIONS


13,980,015


6,092,183


54,198,263


19,185,029










OTHER INCOME (EXPENSE):









     Interest income


4,845


2,305


14,016


4,861

     Interest expense


(679,484)


(1,414,015)


(3,088,685)


(2,123,800)

     Foreign currency transaction gain (loss)


171,058


194,433


(286,576)


(25,972)

     Grant income


716,121


168,900


1,240,542


204,492

     Investment income


2,399


218


348,382


69,289

     Other (expense) income


(424)


7


(335)


2,021










        Total Other Income (Expense), net


214,515


(1,048,152)


(1,772,656)


(1,869,109)










INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES


14,194,530


5,044,031


52,425,607


17,315,920










INCOME TAXES


-


-


-


-










NET INCOME FROM CONTINUING OPERATIONS


14,194,530


5,044,031


52,425,607


17,315,920










NET INCOME FROM DISCONTINUED OPERATIONS, NET OF INCOME TAX


-


12,362,523


-


39,461,777










NET INCOME

$

14,194,530

$

17,406,554

$

52,425,607

$

56,777,697










COMPREHENSIVE INCOME:









   NET INCOME

$

14,194,530

$

17,406,554

$

52,425,607

$

56,777,697










   OTHER COMPREHENSIVE INCOME









       Foreign currency translation gain (loss)


302,391


796,724


(690,948)


6,551,401










   TOTAL COMPREHENSIVE INCOME  

$

14,496,921

$

18,203,278

$

51,734,659

$

63,329,098










BASIC AND DILUTED EARNINGS PER SHARE









    From continuing operations

$

0.18

$

0.06

$

0.66

$

0.22

    From discontinued operations


0.00


0.16


0.00


0.50

    Net income

$

0.18

$

0.22

$

0.66

$

0.72










WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING:









    Basic and diluted


79,055,053


79,055,053


79,055,053


78,641,031










 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN U.S. DOLLARS)






September 30, 2014


December 31, 2013


(Unaudited)


(As Restated)

ASSETS








CURRENT ASSETS:




    Cash

$          11,797,659


$               8,156,599

    Accounts receivable, net of allowance for doubtful accounts

41,566,819


9,133,130

    Inventories, net of reserve for obsolete inventories

6,033,328


9,095,736

    Prepaid expense

288,292


4,309,574

    Prepaid expense - related parties

3,107,842


-

    Deferred expense - related parties

2,236,288


-

    Advance to suppliers

258,085


-

    Other receivable

168,222


11,665





 Total Current Assets

65,456,535


30,706,704





OTHER ASSETS:




    Long-term investment

19,338,902


3,468,953

    Prepayment for long-term assets

28,802,523


33,985,148

    Property, plant and equipment, net

120,956,039


101,970,707

 

Total Other Assets

169,097,464


139,424,808

Total Assets

$        234,553,999


$           170,131,512





LIABILITIES AND SHAREHOLDERS' EQUITY








CURRENT LIABILITIES:




    Accounts payable

$               312,405


$               2,184,964

    Accounts payable - related parties

4,343,814


13,807,605

    Advance from customers

161,901


297,034

    Short-term bank loans

36,071,023


9,085,353

    Long-term bank loans - current portion

26,895,700


20,252,077

    Accrued liabilities and other payable

4,812,723


4,643,272

    Due to related parties

673,348


-

    Dividend payable

790,551


-

    Deferred grant income

-


520,045





        Total Current Liabilities

74,061,465


50,790,350





OTHER LIABILITIES:




    Long-term bank loans - non-current portion

44,706,991


54,499,727





        Total Liabilities

118,768,456


105,290,077





SHAREHOLDERS' EQUITY:




    Ordinary shares ($0.001 par value; 225,000,000 shares authorized; 79,055,053




        shares issued and outstanding at September 30, 2014 and December 31, 2013)

79,055


79,055

    Additional paid-in capital

117,525,377


117,525,377

    Accumulated deficit

(12,019,389)


(63,654,445)

    Statutory reserve

6,412,892


6,412,892

    Accumulated other comprehensive income - foreign currency translation adjustment

3,787,608


4,478,556





        Total Shareholders' Equity

115,785,543


64,841,435









        Total Liabilities and Shareholders' Equity

$        234,553,999


$           170,131,512





 

 PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES 

 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
















 For the Nine Months Ended 




 September 30, 




2014


2013






  (As Restated)  

 CASH FLOWS FROM OPERATING ACTIVITIES: 






 Net income from continuing operations 


$

52,425,607

$

17,315,920

 Adjustments to reconcile net income from operations to net cash 






 provided by operating activities: 






 Depreciation 



4,022,232


1,160,603

 Changes in operating assets and liabilities: 






 Accounts receivable 



(32,622,490)


1,568,675

 Other receivable 



(156,943)


19,657

 Prepaid expense 



3,956,449


(4,479,159)

 Prepaid expense - related parties 



(3,111,736)


-

 Deferred expense - related parties 



(2,239,090)


-

 Inventories 



2,918,687


(5,191,641)

 Advance to suppliers 



(258,408)


-

 Accounts payable 



(1,839,459)


77,561

 Accounts payable - related parties 



(6,849,973)


494,616

 Advance from customers 



(130,484)


473,183

 Advance from customers - related parties 



-


(12,983,365)

 Accrued liabilities and other payable 



241,133


5,613,387

 Due to related parties 



23,348


-







 NET CASH PROVIDED BY OPERATING ACTIVITIES FROM CONTINUING OPERATIONS 



16,378,873


4,069,437







 CASH FLOWS FROM INVESTING ACTIVITIES: 






 Proceeds from government grants for fishing vessels construction  



1,195,275


6,224,357

 Payment for fishing vessels deposit 



-


(3,271,878)

 Prepayments made for long-term assets 



(22,461,657)


-

 Purchase of property, plant and equipment 



(1,268,934)


(213,813,927)

 Advance to related parties 



-


(4,044,837)

 Investment in joint venture interest 



(15,946,109)


-

 Decrease in cash related to sale of subsidiary 



-


(76,987,656)







 NET CASH USED IN INVESTING ACTIVITIES FOR CONTINUING OPERATIONS 



(38,481,425)


(291,893,941)







 CASH FLOWS FROM FINANCING ACTIVITIES: 






 Proceeds from short-term bank loans 



44,891,439


43,439,587

 Repayments of short-term bank loans 



(17,724,568)


(46,996,499)

 Proceeds from long-term bank loans 



3,742,454


45,889,055

 Repayments of long-term bank loans 



(5,682,835)


(1,890,743)

 Advance from related parties 



650,000


3,847,492

 Cash acquired in recapitalization 



-


3,565,355







 NET CASH PROVIDED BY FINANCING ACTIVITIES FROM CONTINUING OPERATIONS 



25,876,490


47,854,247







 CASH FLOWS FROM DISCONTINUED OPERATIONS: 






 Net income from discontinued operations 



-


39,461,777

 Adjustments to reconcile net income from operations to net cash 






 provided by operating activities: 






 Depreciation 



-


5,756,650

 Gain on derivative 



-


(1,764,249)

 Changes in operating assets and liabilities 



-


26,198,314













 NET CASH PROVIDED BY OPERATING ACTIVITIES FROM DISCONTINUED OPERATIONS 



-


69,652,492







 NET CASH PROVIDED BY INVESTING ACTIVITIES FROM DISCONTINUED OPERATIONS 



-


7,624,250







 NET CASH USED IN FINANCING ACTIVITIES FOR DISCONTINUED OPERATIONS 



-


(560,216)







 NET CASH PROVIDED BY DISCONTINUED OPERATIONS 



-


76,716,526







 EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS 



(132,877)


2,162,371







 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 



3,641,060


(161,091,360)







 CASH AND CASH EQUIVALENTS - beginning of period 



8,156,599


171,923,360







 CASH AND CASH EQUIVALENTS - end of period 


$

11,797,659

$

10,832,000







 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: 






 Cash paid: 






 From continuing operations 






 Interest paid 


$

4,065,601

$

2,325,864

 From discontinued operations 






 Income tax paid 


$

-

$

12,814,679







 NON-CASH INVESTING AND FINANCING ACTIVITIES: 






 Purchase of property, plant and equipment by setting off advance to related parties 


$

-

$

54,882,642

 Deposit on setting up joint venture netted of accounts payable - related parties 


$

-

$

6,090,302

 Acquisition of property, plant and equipment by decreasing prepayment for long-term assets 


$

27,099,444

$

-

 Decrease in cost of property, plant and equipment by proceeds from government grants 


$

1,195,275

$

-

 Decrease in cost of property, plant and equipment by recognition of deferred grant income 


$

512,261

$

-

 

SOURCE Pingtan Marine Enterprise Ltd.