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Pingtan Marine Enterprise Reports Financial Results for the Third Quarter and Nine Months Ended September 30, 2017

Pingtan Marine Enterprise Reports Financial Results for the Third Quarter and Nine Months Ended September 30, 2017

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Company Reports Third Quarter EPS of $ 0.08

Company to Hold Conference Call on Thursday, November 9, 2017, at 8:30 AM ET

FUZHOU, China, Nov. 8, 2017 /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 unaudited financial results for the third quarter and nine months ended September 30, 2017.

The Company's recent notable events are as follows:

  • July 14, 2017: The Company announced a quarterly cash dividend of $0.01 per ordinary share outstanding, payable in cash on or about August 15, 2017 to shareholders of record on July 31, 2017.  This marks the eleventh consecutive quarterly dividend paid by Pingtan. The Company intends to continue paying a cash dividend on a quarterly basis, and expects to adjust its quarterly dividend rate in accordance with its earnings performance.

Management Comments

Mr. Xinrong Zhuo, Chairman and CEO of the Company, commented, "We were pleased to continue to deliver strong operating and financial results despite a longer summer fishing off-season during 2017, and we were still able to achieve quarter EPS of $0.08. These results are accredited to management's dedication to expand business by increasing our operating vessels and fishing territory.  Meanwhile, our sales team continues to innovate and explore new sales channels, and secured a number of strategic cooperation agreements with major restaurant chain and e-commerce entities, including JD.com. We are now working closely with JD's team to finalize all the preparation work to launch our fishing products online. We anticipate achieving good performance from e-commerce sales in the next report period."

Factors Affecting Pingtan's Results of Operation:

As previously disclosed in our Forms 10-K and 10-Q filed since 2015, in early December 2014, the Indonesian government introduced a moratorium on issuing new fishing licenses and renewals so that the country's Ministry of Maritime Affairs and Fisheries ("MMAF") could combat illegal fishing and rectify ocean fishing order. In February 2015, Pingtan ceased all fishing operations in Indonesian waters.  During the moratorium, PME was informed that local fishing licenses of four vessels operated through one of its local related companies PT. Avona Mina Lestari ("PT Avona"), and the fishery business license of the other local related company PT. Dwikarya Reksa Abadi ("PT Dwikarya") were revoked.  As a result and because of the general moratorium, all local fishing licenses of PME's vessels in Indonesia are currently inactive.  The MMAF has not yet restored the license issuance or renewal process for vessels built abroad. Since the Company derives a majority of its revenue from this area, this ban has caused a significant drop in the Company's production.

In November 2015, the Indonesian government announced that the moratorium had concluded. As the MMAF has not implemented new fishing policies and resumed the license renewal process, we do not know when exactly licensing and renewal will start. The Company has been paying close attention to any new trends in fishing policy and has been actively exploring new cooperation models.

In September 2017, the Company was informed that the fishing licenses of 13 vessels deployed to the Indo-Pacific waters were suspended and the vessels were docked in the port by the Ministry of Agriculture and Fisheries ("MAF") of the Democratic Republic of Timor-Leste. The MAF is alleging and is investigating whether false statements were made during the licensing process and the vessels were simultaneously registered in Indonesia.  The Company disputes these allegations.

Among the Company's 140 vessels, 12 are located in the Bay of Bengal in India, 9 are located in international waters and 13 are located in the Indo-Pacific waters. Two squid jigging vessels finished renovation in October 2017 and will be deployed to international waters. The remaining vessels are temporarily not operating due to the moratorium discussed above.

Third Quarter 2017 Financial Highlights (all results are compared to prior year period)

  • Revenue increased 367.3% to $5.5 million from $1.2 million as a result of more fishing vessels put into operation.
  • Gross loss was $1.3 million compared to gross loss of $12.3 million, and gross margin was (23.9)% compared to (1,053.3)%.
  • Net income attributable to owners of the Company was $6.0 million, or $0.08 per basic and diluted share, compared to a net loss of $12.8 million, or $(0.16) per basic and diluted share. 

Third Quarter 2017 Selected Financial Highlights

($ in millions, except per share data)

Three Months ended September 30,


2017

2016


(Unaudited)

(Unaudited)

Revenue

$5.5

$1.2

Cost of Revenue

$6.8

$13.5

Gross Loss

$1.3

$12.3

Gross Margin

(23.9)%

(1,053.3)%

Net Income (Loss)

$6.5

$(13.9)

Basic and Diluted Weighted Average Shares

79.1

79.1

EPS (in $)

$0.08

$(0.16)

 

Balance Sheet Highlights

($ in millions, except per share data)



9/30/2017

(Unaudited)

12/31/2016

(Audited)

Cash and Cash Equivalents



$22.3

$0.8

Total Current Assets



$35.1

$60.8

Total Assets



$218.8

$226.5

Total Current Liabilities



$58.6

$64.9

Total Long-term Debt, net of current portion



$19.9

$21.9

Total Liabilities



$78.5

$86.8

Shareholders' Equity



$140.2

$139.7

Total Liabilities and Shareholders' Equity



$218.8

$226.5

Book Value Per Share (in $)



$1.77

$1.77

Consolidated Financial and Operating Review

Revenue

Revenue for the three months ended September 30, 2017, was $5.5 million, increasing by 367.3% from $1.2 million of the same period in 2016. The increase was mainly attributable to our business expansion resulting from more fishing vessels put into operation.

For the nine months ended September 30, 2017, the Company's revenue was $46.8 million, increasing by 533.7% from $7.4 million in the nine months of 2016. The increase was primarily due to an increase in sales volume from business expansion, as well as an increase in average unit sale price as marine catches are in short supply resulting from a longer fishing off-season from May to August for China seas during 2017 as opposed to  June to August.

Gross Margin

The Company's gross margin was (23.9)% for the three months ended September 30, 2017, compared to (1,053.3)% in the prior-year period. The significant increase was primarily attributable to the decrease in our unit production cost of fish resulting from the increase in our harvest volume by deploying more fishing vessels into operation.

For the nine months ended September 30, 2017, gross margin increased to 21.1% from (252.6)% in the same period of 2016. The increase was primarily attributable to the decrease in our unit production cost of fish resulting from the increase in our harvest volume by deploying more fishing vessels into operation.

Selling Expenses

Selling expenses were $0.2 million for the three months ended September 30, 2017, compared to $0.1 million in the prior-year period.

For the nine months ended September 30, 2017, selling expenses were $0.8 million, compared to $0.5 million in the same period of 2016.

General & Administrative Expenses

For the three months ended September 30, 2017, general and administrative expenses were $1.0 million, compared to $0.7 million in the prior-year period.

For the nine months ended September 30, 2017, general and administrative expenses were $3.3 million compared to $3.0 million in the same period of 2016.

Net Income/Loss

For the three months ended September 30, 2017, net income attributable to owners of the Company was $6.0 million, or $0.08 per basic and diluted share, compared to net loss attributable to owners of the Company of $12.8 million, or $(0.16) per basic and diluted share, in the same period of 2016. The increase was primarily due to the factors described above.

For the nine months ended September 30, 2017, net income attributable to owners of the Company was $24.8 million, or $0.31 per basic and diluted share, compared to net loss attributable to owners of the Company of $22.2 million, or $(0.28) per basic and diluted share, in the same period of 2016.

Conference Call Details

Pingtan also announced that it will discuss financial results in a conference call on Thursday, November 9, 2017, at 8:30 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/q3-2017 . This webcast will be archived and accessible through the Company's website for approximately 30 days following the call.

About Pingtan

Pingtan is a global fishing company engaging in ocean fishing through its subsidiary, Fujian Provincial Pingtan County Ocean Fishing Group Co., Ltd., or Pingtan Fishing.

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. Such forward looking statements include, but are not limited to, Pingtan's expectation that its continued expansions in new fishing territories would support it to solidify its position as a leading fishing company in China.   Although forward-looking statements reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Risks include the ability to successfully market, sell and distribute our products online, including unanticipated delivery issues; anticipated growth and growth strategies; need for additional capital and the availability of financing; our ability to successfully manage relationships with customers, distributors and other important relationships; technological changes; competition; demand for our products and service the deterioration of general economic conditions, whether internationally, nationally or in the local markets in which we operate; legislative or regulatory changes that may adversely affect our business, such as the Indonesian moratorium and actions taken by local countries that effect our vessels and operations; operational, mechanical, climatic or other unanticipated issues that adversely affect the production capacity of the Company's fishing vessels and their ability to generate expected revenue and net income.  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 and Quarterly Reports on Form 10-Q . 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

Johnny Zhang
IR Manager
Pingtan Marine Enterprise Ltd.
Tel: +86 591 8727 1753
jzhang@ptmarine.net

Maggie Li
IR Deputy Manager
Pingtan Marine Enterprise Ltd.
Tel: +86 591 8727 1753
mli@ptmarine.net

INVESTOR RELATIONS COUNSEL:

The Equity Group Inc.
Katherine Yao, Senior Associate
Tel: +86 10 6587 6435
kyao@equityny.com  

 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)

(IN U.S. DOLLARS)



For the Three Months Ended


For the Nine Months Ended


September 30,


September 30,


2017


2016


2017


2016









REVENUE

$

5,462,792


$

1,168,946


$

46,819,813


$

7,388,395

COST OF REVENUE


6,768,802



13,481,775



36,942,905



26,054,703

GROSS (LOSS) PROFIT


(1,306,010)



(12,312,829)



9,876,908



(18,666,308)

OPERATING EXPENSES:












Selling


194,202



93,843



761,495



508,062

General and administrative


977,603



660,700



3,325,268



3,038,984

Grant income


(9,274,101)



-



(22,023,741)



(153,514)

Loss on fixed assets disposal


190,162



-



187,709



-

Total Operating (Profit) Expenses


(7,912,134)



754,543



(17,749,269)



3,393,532

INCOME (LOSS) FROM OPERATIONS


6,606,124



(13,067,372)



27,626,177



(22,059,840)

OTHER INCOME (EXPENSE):












Interest income


20,617



782



172,043



4,051

Interest expense


(490,383)



(738,548)



(1,841,792)



(1,656,672)

Foreign currency transaction gain (loss)


396,852



(86,414)



941,734



(542,694)

Gain from cost method investment


318,125



-



318,125



378,997

Loss on equity method investment


(322,151)



(6,968)



(27,500)



(25,095)

Other expense


(66)



(59)



(6,331)



(476)

Total Other Income (Expense), net


(77,006)



(831,207)



(443,721)



(1,841,889)

INCOME (LOSS) BEFORE INCOME TAXES


6,529,118



(13,898,579)



27,182,456



(23,901,729)

INCOME TAXES


-



-



-



993

NET INCOME (LOSS)

$

6,529,118


$

(13,898,579)


$

27,182,456


$

(23,902,722)

LESS: NET INCOME (LOSS) ATTRIBUTABLE TO THE NON-CONTROLLING INTEREST


576,194



(1,075,177)



2,351,967



(1,750,492)

NET INCOME (LOSS) ATTRIBUTABLE TO OWNERS OF THE COMPANY

$

5,952,924


$

(12,823,402)


$

24,830,489


$

(22,152,230)

COMPREHENSIVE INCOME (LOSS):












NET INCOME (LOSS)


6,529,118



(13,898,579)



27,182,456



(23,902,722)

OTHER COMPREHENSIVE INCOME (LOSS)












Unrealized foreign currency translation gain (loss)


2,138,127



(459,166)



4,821,019



(3,831,852)

COMPREHENSIVE INCOME (LOSS)

$

8,667,245


$

(14,357,745)


$

32,003,475


$

(27,734,574)

LESS: COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE NON-CONTROLLING INTEREST


744,763



(1,111,153)



2,732,334



(2,054,095)

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO OWNERS OF THE COMPANY

$

7,922,482


$

(13,246,592)


$

29,271,141


$

(25,680,479)

NET INCOME (LOSS) PER ORDINARY SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY












Basic and diluted

$

0.08


$

(0.16)


$

0.31


$

(0.28)

WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING:












Basic and diluted


79,055,053



79,055,053



79,055,053



79,055,053
















 

 

 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(IN U.S. DOLLARS)



September 30,


December 31,

2017

2016

ASSETS

(Unaudited)



CURRENT ASSETS:




Cash

$

22,251,902


$

820,396

Restricted cash


2,320,360



2,911,922

Accounts receivable, net of allowance for doubtful accounts


5,535,370



11,322,726

Inventories, net of reserve for inventories


3,000,785



8,811,111

Advances to suppliers


939,162



3,969,351

Prepaid expenses


-



8,145

Prepaid expenses - related parties


776,871



522,337

Other receivables


270,115



31,835,456

Other receivables - related parties


-



639,917

Total Current Assets


35,094,565



60,841,361







OTHER ASSETS:






Cost method investment


3,164,128



3,027,245

Equity method investment


30,054,827



28,493,273

Prepayment for long-term assets


11,397,913



11,913,912

Property, plant and equipment, net


139,060,927



122,196,594







Total Other Assets


183,677,795



165,631,024







Total Assets

$

218,772,360


$

226,472,385







LIABILITIES AND SHAREHOLDERS' EQUITY






CURRENT LIABILITIES:






Accounts payable

$

6,872,180


$

916,737

Accounts payable - related parties


4,750,145



2,560,760

Short-term bank loans


16,600,183



21,554,636

Long-term bank loans - current portion


12,083,955



17,298,544

Accrued liabilities and other payables


5,473,686



4,399,536

Accrued liabilities and other payables - related party


9,819,942



18,147,152

Due to related parties


3,040,602



43,354







Total Current Liabilities


58,640,693



64,920,719







OTHER LIABILITIES:






Long-term bank loans - non-current portion


19,888,804



21,839,412







Total Liabilities


78,529,497



86,760,131







COMMITMENTS AND CONTINGENCIES






SHAREHOLDERS' EQUITY:






Equity attributable to owners of the company:






Ordinary shares ($0.001 par value; 225,000,000 shares authorized; 79,055,053 shares issued and outstanding at June 30, 2017 and December 31, 2016)


79,055



79,055

Additional paid-in capital


81,906,871



111,008,085

Retained earnings


39,897,052



17,438,215

Statutory reserve


9,391,827



9,391,827

Accumulated other comprehensive loss


(8,438,399)



(12,879,051)

Total equity attributable to owners of the company


122,836,406



125,038,131

Non-controlling interest


17,406,457



14,674,123







Total Shareholders' Equity


140,242,863



139,712,254







Total Liabilities and Shareholders' Equity

$

218,772,360


$

226,472,385

 

 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(IN U.S. DOLLARS)



For the Nine Months Ended
September 30,


2017


2016

CASH FLOWS FROM OPERATING ACTIVITIES:




Net income (loss)

$

27,182,456


$

(23,902,722)

Adjustments to reconcile net income (loss) from operations to net cash provided by operating activities:






Depreciation


6,454,155



4,769,455

Increase (decrease) in allowance for doubtful accounts


221,209



(112,562)

Increase in reserve for inventories


2,639,816



1,506,320

Loss on equity method investment


27,500



25,095

Loss on disposal of fixed assets


194,039



-

Changes in operating assets and liabilities:






Accounts receivable


5,928,573



9,335,357

Inventories


3,421,517



(1,520,001)

Advances to suppliers


3,133,470



297,813

Prepaid expenses


8,311



(4,590)

Prepaid expenses - related parties


(225,434)



3,434,109

Other receivables


32,217,955



(95,068)

Other receivables - related party


1,180,928



-

Accounts payable


954,719



(41,081)

Accounts payable - related parties


2,024,366



(296,671)

Accrued liabilities and other payables


854,714



930,168

Accrued liabilities and other payables - related party


(9,886,677)



-

Due to related parties


14,854



8,709,266







NET CASH PROVIDED BY OPERATING ACTIVITIES


76,346,471



3,034,888







CASH FLOWS FROM INVESTING ACTIVITIES:






Purchase of property, plant and equipment


(45,292,877)



(959,034)

Proceeds from government grants for fishing vessels construction


2,941,912



-

Prepayments made for long-term assets


-



(44,329,098)

Proceeds from transferring equity method investment share


-



15,199,416

Payments for equity method investment


(294,191)



-







NET CASH USED IN INVESTING ACTIVITIES


(42,645,156)



(30,088,716)







CASH FLOWS FROM FINANCING ACTIVITIES:






Proceeds from short-term bank loans


12,912,868



18,999,502

Repayments of short-term bank loans


(18,701,191)



(14,168,748)

Proceeds from long-term bank loans


-



18,999,270

Repayments of long-term bank loans


(8,722,769)



(6,216,561)

Decrease (Increase) in restricted cash


706,059



(2,538,303)

Advances from related parties


2,982,394



3,753,620

Payments made for dividend


(2,371,652)



(2,371,652)







NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES


(13,194,291)



16,457,128







EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS


924,482



(284,053)







NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


21,431,506



(10,880,753)







CASH AND CASH EQUIVALENTS - beginning of period


820,396



11,448,684







CASH AND CASH EQUIVALENTS - end of period

$

22,251,902


$

567,931







SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:






Cash paid for:






Interest

$

1,945,560


$

1,976,789

Income taxes

$

-


$

993

NON-CASH INVESTING AND FINANCING ACTIVITIES:






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

$

1,029,669


$

38,606,518

Property and equipment acquired on credit as payable

$

4,818,866



-

Offset other receivables - related parties against due to related parties

$

-


$

5,114,910

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SOURCE Pingtan Marine Enterprise Ltd.