Performance Shipping Inc. (NASDAQ: PSHG) (the “Company”), a global
shipping company specializing in the ownership of tanker vessels,
today reported a net loss from continuing and discontinued
operations of $2.1 million and net loss from continuing and
discontinued operations attributable to common stockholders of
$11.5 million for the first quarter of 2022, compared to a net loss
from continuing and discontinued operations and net loss from
continuing and discontinued operations attributable to common
stockholders of $2.9 million for the same period in 2021. Net loss
from continuing and discontinued operations attributable to common
stockholders for the three-month period ended March 31, 2022
included a one-time non-cash deemed dividend of $9.3 million,
stemming from the exchange of shares of certain holders of our
common stock for shares of Series B preferred stock at the closing
of the tender offer in January 2022.
Revenue from continuing and discontinued
operations was $8.6 million ($5.2 million net of voyage expenses)
for the first quarter of 2022, compared to $8.4 million ($3.5
million net of voyage expenses) for the same period in 2021. This
increase was attributable to the increased time-charter equivalent
rates (TCE rates) achieved during the quarter. Fleetwide, the
average time charter equivalent rate for the first quarter of 2022
was $12,352, compared with an average rate of $7,691 for the same
period in 2021. During the first quarter of 2022, net cash used in
operating activities of continuing and discontinued operations was
$3.9 million, compared with net cash used in operating activities
of continuing and discontinued operations of $1.4 million for the
first quarter of 2021.
As of March 31, 2022, the Company’s number of
common shares issued and outstanding was 2,592,421. As of the date
hereof, the number of common shares issued and outstanding is
10,395,030. During the first quarter of 2022 and up to the date
hereof, the Company sold in its previously announced at-the-market
offering an aggregate of 526,916 common shares at a weighted
average sales price of $2.94, for total proceeds of approximately
$1.5 million, net of commissions and other expenses. In addition,
in the second quarter of 2022, the Company sold in an underwritten
public offering 7,620,000 units at a price of $1.05 per unit, with
each unit consisting of one common share and one warrant to
purchase one common share, for total proceeds of approximately $7.4
million, net of underwriters’ fees and commissions.
On June 21, 2022, the Company announced its
agreement to acquire its sixth Aframax tanker with expected
delivery on or about July 5, 2022. The acquisition cost of
approximately $27.6 million will be financed with cash on hand and
the incurrence of debt through a new senior secured facility that
the Company anticipates it will enter into prior to delivery of the
vessel.
Commenting on the results of the first quarter
of 2022 and subsequent developments, Andreas Michalopoulos, the
Company’s Chief Executive Officer, stated:
“The first two months of 2022 saw a continuation
of the very soft charter rates that prevailed throughout 2021. In
March 2022, we saw a marked improvement in rates due to the
unfortunate Russian invasion of Ukraine, which resulted in higher
volumes of crude oil being transported over longer distances to
meet increasing global crude oil demand. We gradually took
advantage of the improved spot charter market as we undertook
positioning voyages, resulting in fleetwide average time charter
equivalent rates of $12,352 per day during the first quarter and in
a net loss of $2.1 million from our fleet operations. The one-time
non-cash deemed dividend from our exchange offer has no impact
on our results from operations or the cash position of the Company.
So far, during the second quarter of 2022, our fleetwide average
time charter rates are significantly above those of the first
quarter of 2022.
“We believe that the encouraging freight rate
developments experienced during the latter part of the first
quarter of 2022, and continuing into the current quarter, point
toward a sustainable charter rate recovery in the medium term that
we now expect to take advantage of with our expanded fleet of six
Aframax tankers. Positive crude oil demand prospects and the urgent
need for global crude oil inventory restocking are resulting in
increased crude oil production. We expect the rising demand for
seaborne transportation coupled with low expected fleet growth and
emission-related supply constraints to support higher charter rates
for our vessels.
“During the first quarter of 2022, we completed
the special survey and the installation of the ballast water
treatment system (BWTS) on the M/T Blue Moon, and we intend to
complete the same works on our M/T P. Kikuma during the fourth
quarter of this year. Based on this plan, having 100% of our
existing fleet BWTS fitted by the end of this year and no scheduled
special surveys for 2023 will allow full utilization of our
vessels.
“As a result of our financial results, and in
accordance with our dividend policy, we will not declare a dividend
for our Q1 2022 results from operations.”
Tanker Market Update for the first
quarter of 2022:
- Tanker fleet supply was 658.2
million dwt, up 0.9% from 652.3 million dwt from the previous
quarter and up 1.7% from Q1 2021 levels of 647.5 million dwt.
- Tanker demand in billion
tonne-miles is projected to increase by a firm 7.6% in 2022,
supported by the continued easing of OPEC crude oil production cuts
along with a shift in trading patterns to longer-haul distances
emerging due to the Russia-Ukraine war.
- Tanker fleet supply in deadweight
terms is estimated to grow by a moderate 2.4% in 2022.
- Crude oil tanker fleet utilization
was estimated at 78.0%, slightly down from 79.0% in the previous
quarter and at the same levels of 78.0% in Q1 2021.
- Newbuilding tanker contracting was
just 0.6 million dwt in the first quarter, resulting in a tanker
orderbook to fleet ratio of 6.1%, the lowest level seen since
1996.
- Daily spot charter rates for
Aframax tankers averaged $32,266, up 190.9% from the previous
quarter average of $11,093 and up 206.5% from the Q1 2021 average
of $10,527.
- The value of a 10-year-old Aframax
tanker at the end of the first quarter was $27.5 million, up 1.9%
from $27.0 million in the previous quarter, and up 17.0% from $23.5
million in Q1 2021.
- The number of tankers used for
floating storage (excluding dedicated storage) was 146 (21.3
million dwt), down 13.6% from 169 (25.6 million dwt) from the
previous quarter and down 12.6% from Q1 2021 levels of 167 (26.4
million dwt).
- Global oil consumption was 98.9
million bpd, down 1.6% from the previous quarter level of 100.4
million bpd, and up 4.9% from Q1 2021 levels of 94.2 million
bpd.
- Global oil production was 98.8
million bpd, up 0.6% from the previous quarter level of 98.3
million bpd and up 6.8% from Q1 2021 levels of 92.5 million
bpd.
- OECD commercial inventories were
2,623.8 million barrels, down 3.0% from the previous quarter level
of 2,704.2 million barrels, and down 11.5% from Q1 2021 levels of
2,965.9 million barrels.
- During the global gradual recovery
from COVID-19, we continue to take proactive measures to ensure the
health and wellness of our crew and onshore employees while
endeavoring to maintain effective business continuity and
uninterrupted service to our customers. While the situation is
improving, we continue to incur increased costs as a result of the
restrictions imposed in various jurisdictions creating delays and
additional complexities with respect to port calls and crew
rotations.
The above market outlook update is based on
information, data, and estimates derived from industry sources.
There can be no assurances that such trends will continue or that
anticipated developments in tanker demand, fleet supply or other
market indicators will materialize. While we believe the market and
industry information included in this release to be generally
reliable, we have not independently verified any third-party
information or verified that more recent information is not
available.
Summary of
Selected Financial & Other Data (Continuing and Discontinued
Operations1 ) |
|
|
For the three months ended March 31, |
|
|
2022 |
|
2021 |
|
|
(unaudited) |
|
(unaudited) |
STATEMENT
OF OPERATIONS DATA (in thousands of US Dollars): |
Revenue |
$ |
8,568 |
|
$ |
8,397 |
|
Voyage expenses |
|
3,380 |
|
|
4,936 |
|
Vessel operating expenses |
|
3,327 |
|
|
2,878 |
|
Net loss |
|
(2,080 |
) |
|
(2,853 |
) |
Net loss attributable to common stockholders |
|
(11,478 |
) |
|
(2,853 |
) |
Loss per common share, basic and diluted |
|
(3.43 |
) |
|
(0.57 |
) |
FLEET
DATA |
Average number of vessels |
|
5.0 |
|
|
5.0 |
|
Number of vessels |
|
5.0 |
|
|
5.0 |
|
Ownership days |
|
450 |
|
|
450 |
|
Available days |
|
420 |
|
|
450 |
|
Operating days (2) |
|
400 |
|
|
373 |
|
Fleet utilization |
|
95.2 |
% |
|
82.9 |
% |
AVERAGE
DAILY RESULTS |
Time charter equivalent (TCE) rate (3) |
$ |
12,352 |
|
$ |
7,691 |
|
Daily vessel operating expenses (4) |
$ |
7,393 |
|
$ |
6,396 |
|
|
|
|
|
|
|
|
_______________
(1) Discontinued Operations refer to our
container vessels segment that we disposed of in 2020.
(2) Operating days are the number of available
days in a period less the aggregate number of days that our vessels
are off-hire. The specific calculation counts as on-hire the days
of the ballast leg of the spot voyages, as long as a charter party
is in place. The shipping industry uses operating days to measure
the aggregate number of days in a period during which vessels
actually generate revenues.
(3) Time charter equivalent rates, or TCE rates,
are defined as revenue (voyage, time charter and pool revenue),
less voyage expenses during a period divided by the number of our
available days during the period, which is consistent with industry
standards. Voyage expenses include port charges, bunker (fuel)
expenses, canal charges and commissions. TCE is a non-GAAP measure.
TCE rate is a standard shipping industry performance measure used
primarily to compare daily earnings generated by vessels despite
changes in the mix of charter types (i.e., voyage (spot) charters,
time charters and bareboat charters).
(4) Daily vessel operating expenses, which
include crew wages and related costs, the cost of insurance and
vessel registry, expenses relating to repairs and maintenance, the
costs of spares and consumable stores, lubricant costs, tonnage
taxes, regulatory fees, environmental costs, lay-up expenses and
other miscellaneous expenses, are calculated by dividing vessel
operating expenses by ownership days for the relevant period.
Fleet
Employment Profile (As of June 29, 2022) |
Performance Shipping
Inc.’s fleet is employed as follows: |
|
|
|
|
|
|
|
Vessel |
Year of Build |
Capacity |
Builder |
Charter Type |
|
Aframax Tanker Vessels |
1 |
BLUE
MOON |
2011 |
104,623
DWT |
Sumitomo Heavy Industries Marine & Engineering Co., LTD. |
Spot |
2 |
BRIOLETTE |
2011 |
104,588
DWT |
Sumitomo Heavy Industries Marine & Engineering Co., LTD. |
Pool |
3 |
P.
FOS |
2007 |
115,577
DWT |
Sasebo Heavy Industries Co. Ltd |
Pool |
4 |
P.
KIKUMA |
2007 |
115,915
DWT |
Samsung Heavy Industries Co Ltd. |
Spot |
5 |
P.
YANBU |
2011 |
105,391
DWT |
Sumitomo Heavy Industries Marine & Engineering Co., LTD. |
Pool |
|
|
|
|
|
|
About the Company
Performance Shipping Inc. is a global provider
of shipping transportation services through its ownership of
Aframax tankers. The Company's current fleet is employed on spot
voyages and through pool arrangements.
Cautionary Statement Regarding
Forward-Looking Statements
Matters discussed in this press release may
constitute forward-looking statements. The Private Securities
Litigation Reform Act of 1995 provides safe harbor protections for
forward-looking statements in order to encourage companies to
provide prospective information about their business.
Forward-looking statements include, but are not limited to,
statements concerning plans, objectives, goals, strategies, future
events or performance, and underlying assumptions and other
statements, which are other than statements of historical facts,
including with respect to the delivery of the vessel we have agreed
to acquire.
The Company desires to take advantage of the
safe harbor provisions of the Private Securities Litigation Reform
Act of 1995 and is including this cautionary statement in
connection with this safe harbor legislation. The words "believe,"
"anticipate," "intends," "estimate," "forecast," "project," "plan,"
"potential," "may," "should," "expect," "pending," and similar
expressions, terms or phrases may identify forward-looking
statements.
The forward-looking statements in this press
release are based upon various assumptions, many of which are
based, in turn, upon further assumptions, including without
limitation, our management's examination of historical operating
trends, data contained in our records and other data available from
third parties. Although we believe that these assumptions were
reasonable when made, because these assumptions are inherently
subject to significant uncertainties and contingencies which are
difficult or impossible to predict and are beyond our control, we
cannot assure you that we will achieve or accomplish these
expectations, beliefs or projections.
In addition to these important factors, other
important factors that, in our view, could cause actual results to
differ materially from those discussed in the forward-looking
statements include but are not limited to: the strength of world
economies, fluctuations in currencies and interest rates, general
market conditions, including fluctuations in charter rates and
vessel values, changes in demand in the tanker shipping industry,
changes in the supply of vessels, changes in worldwide oil
production and consumption and storage, changes in our operating
expenses, including bunker prices, crew costs, dry-docking and
insurance costs, our future operating or financial results,
availability of financing and refinancing including with respect to
the vessel we have agreed to acquire, changes in governmental rules
and regulations or actions taken by regulatory authorities,
potential liability from pending or future litigation, general
domestic and international political conditions, the length and
severity of epidemics and pandemics, including the ongoing outbreak
of the novel coronavirus (COVID-19) and its impact on the demand
for seaborne transportation of petroleum and other types of
products, changes in governmental rules and regulations or actions
taken by regulatory authorities, potential liability from pending
or future litigation, general domestic and international political
conditions or events, including “trade wars”, armed conflicts
including the war in Ukraine, the imposition of new international
sanctions, acts by terrorists or acts of piracy on ocean-going
vessels, potential disruption of shipping routes due to accidents,
labor disputes or political events, vessel breakdowns and instances
of off-hires and other important factors. Please see our filings
with the U.S. Securities and Exchange Commission for a more
complete discussion of these and other risks and uncertainties.
Disclaimer
This press release does not constitute an offer
to sell or the solicitation of an offer to buy securities and shall
not constitute an offer, solicitation or sale in any jurisdiction
in which such offer, solicitation or sale is unlawful.
(See financial tables attached)
PERFORMANCE SHIPPING INC. |
FINANCIAL TABLES |
Expressed in thousands of U.S. Dollars, except for share and per
share data |
UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
(CONTINUING AND DISCONTINUED OPERATIONS) |
|
|
|
|
|
|
|
For the three months ended March 31, |
|
|
2022 |
|
2021 |
REVENUE: |
|
|
|
|
Revenue |
$ |
8,568 |
|
$ |
8,397 |
|
|
|
|
|
|
EXPENSES: |
|
|
|
|
Voyage expenses |
|
3,380 |
|
|
4,936 |
|
Vessel operating expenses |
|
3,327 |
|
|
2,878 |
|
Depreciation and amortization of deferred charges |
|
2,013 |
|
|
1,816 |
|
General and administrative expenses |
|
1,508 |
|
|
1,503 |
|
Provision for credit losses and write offs |
|
22 |
|
|
7 |
|
Foreign currency losses / (gains) |
|
(46 |
) |
|
51 |
|
Operating loss |
$ |
(1,636 |
) |
$ |
(2,794 |
) |
|
|
|
|
|
OTHER INCOME /
(EXPENSES): |
|
|
|
|
Interest and finance costs |
|
(445 |
) |
|
(467 |
) |
Interest income |
|
1 |
|
|
8 |
|
Other income |
|
- |
|
|
400 |
|
Total other expenses, net |
$ |
(444 |
) |
$ |
(59 |
) |
|
|
|
|
|
Net loss |
$ |
(2,080 |
) |
$ |
(2,853 |
) |
Deemed dividend on Series B
preferred stock upon exchange of common stock |
|
(9,271 |
) |
|
- |
|
Dividends on Series B
preferred stock |
|
(127 |
) |
|
- |
|
|
|
|
|
|
Net loss attributable
to common stockholders |
$ |
(11,478 |
) |
$ |
(2,853 |
) |
|
|
|
|
|
Loss per common share,
basic and diluted |
$ |
(3.43 |
) |
$ |
(0.57 |
) |
|
|
|
|
|
Weighted average
number of common shares, basic and diluted |
|
3,345,664 |
|
|
5,007,493 |
|
|
|
|
|
|
UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE
LOSS (CONTINUING AND DISCONTINUED OPERATIONS) |
|
|
|
|
|
|
|
For the three months ended March 31, |
|
|
2022 |
|
2021 |
|
|
|
|
|
Net loss |
$ |
(2,080 |
) |
$ |
(2,853 |
) |
|
|
|
|
|
Comprehensive
loss |
$ |
(2,080 |
) |
$ |
(2,853 |
) |
|
|
|
|
|
CONDENSED CONSOLIDATED BALANCE SHEET DATA |
|
|
|
(Expressed in
thousands of US Dollars) |
|
|
|
|
|
March 31, 2022 |
|
December 31, 2021* |
ASSETS |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
8,186 |
|
$ |
9,574 |
|
Vessels, net |
|
122,408 |
|
|
123,036 |
|
Other fixed assets, net |
|
125 |
|
|
151 |
|
Other assets |
|
15,389 |
|
|
12,163 |
|
Total assets |
$ |
146,108 |
|
$ |
144,924 |
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term bank debt, net of unamortized deferred financing
costs |
$ |
47,953 |
|
$ |
49,898 |
|
Related party financing, net of unamortized deferred financing
costs |
|
4,813 |
|
|
- |
|
Other liabilities |
|
7,192 |
|
|
7,677 |
|
Total stockholders' equity |
|
86,150 |
|
|
87,349 |
|
Total liabilities and stockholders' equity |
$ |
146,108 |
|
$ |
144,924 |
|
|
|
|
|
|
|
|
* The balance sheet data as of December 31, 2021 has been
derived from the audited consolidated financial statements at that
date.
OTHER
FINANCIAL DATA (CONTINUING AND DISCONTINUED
OPERATIONS) |
|
|
|
|
|
|
|
For the three months ended March 31, |
|
|
2022 |
|
2021 |
|
|
(unaudited) |
|
(unaudited) |
Net Cash used in Operating Activities |
$ |
(3,863 |
) |
$ |
(1,383 |
) |
Net Cash used in Investing Activities |
$ |
(1,161 |
) |
$ |
(253 |
) |
Net Cash provided by / (used in) Financing Activities |
$ |
3,636 |
|
$ |
(1,978 |
) |
|
|
|
|
|
|
|
Dividend Policy – Quarterly
Calculations
Our Board of Directors has adopted a variable
quarterly dividend policy with respect to our common stock,
pursuant to which we may declare and pay a variable quarterly cash
dividend on our common stock. If declared, the quarterly dividend
is expected to be paid each February, May, August and November and
will be equal to available cash from operations during the previous
quarter after cash payments for debt repayment and interest
expense, dividends to holders of our Series B Preferred Shares, if
any, and reserves for the replacement of our vessels, scheduled
drydockings, intermediate and special surveys and other purposes as
our Board of Directors may from time to time determine are
required, after taking into account contingent liabilities, the
terms of any credit facility, our growth strategy and other cash
needs as well as the requirements of Marshall Islands law. The
declaration and payment of dividends is, at all times, subject to
the discretion of our Board of Directors. Our Board of Directors
may review and amend our dividend policy from time to time, in
light of our plans for future growth and other factors.
In accordance with our dividend policy, and
taking into account the above-listed factors, we expect to pay
dividends only if during the preceding quarter Quarterly Cash Flow
is positive and Quarter-End Excess Cash is also positive. As a
general guideline, the amount of any such dividends is expected to
be based on a pay-out ratio of the lower of i) Quarterly Cash Flow;
and ii) Quarter-End Excess Cash. So long as our end of quarter
outstanding debt exceeds our equity market capitalization our
pay-out ratio is expected to be 50%. We will consider increasing
the pay-out ratio gradually up to a maximum level of 90% that we
may achieve when our end of quarter outstanding debt is less than
10% of our equity market capitalization. Quarter-End Excess Cash is
defined as actual end of quarter Cash and Cash Equivalents over our
Minimum Cash Threshold. Minimum Cash Threshold is defined as the
sum of minimum liquidity pursuant to our loan agreements and $1.5
million per vessel. Our bank facilities currently require us to
maintain minimum liquidity of $5.0 million.
Quarterly Cash Flow is equal to voyage and time
charter revenues less voyage expenses, less vessel operating
expenses, less general and administrative expenses, less - the
greater of i) net interest expense and repayment of long-term bank
debt or ii) fleet replacement reserves - and less maintenance
reserves for our fleet and less cash dividends to holders of our
Series B Preferred Shares, if any.
We believe the above approach will ensure the
sustainability of our Company and replacement of our fleet as
during quarters where either Excess Cash is negative or Quarterly
Cash Flow is negative, we will not pay dividends until Quarterly
Cash Flow is positive and Excess Cash is also positive. Below are
our calculations of Quarter-End Excess Cash and Quarterly Cash Flow
for the first quarter of 2022.
DIVIDEND
CALCULATIONS |
(Expressed in
thousands of U.S. Dollars) |
|
|
For the three months ended March 31, 2022 |
Revenue |
$ |
8,568 |
|
Less, Voyage expenses |
$ |
(3,380 |
) |
Less, Vessel operating expenses |
$ |
(3,327 |
) |
Less, General and administrative expenses |
$ |
(1,441 |
) |
|
|
|
Less, Greater of (I) or (II): |
|
|
Interest and finance costs |
$ |
(445 |
) |
Plus, Repayment of long-term bank debt |
$ |
(1,978 |
) |
Total (I) |
$ |
(2,423 |
) |
Or |
|
|
Replacement reserve (II) |
$ |
(1,714 |
) |
|
|
|
Less, Maintenance reserve |
|
(438 |
) |
Quarterly Cash Flow
(A) |
$ |
(2,441 |
) |
|
|
|
Cash and cash equivalents |
$ |
8,186 |
|
Less, Minimum Cash Threshold |
$ |
12,500 |
|
Quarter-End Excess
Cash (B) |
$ |
(4,314 |
) |
|
|
|
Quarterly Cash Flow Test (A)
>0, AND |
|
Not eligible for
dividend |
Quarter-End Excess Cash Test
(B) >0 |
|
Not
eligible for dividend |
Cash Available for
Dividend, lower (A) or (B) |
$ |
- |
|
Payout ratio |
|
50 |
% |
Quarterly
Dividend |
$ |
- |
|
|
|
|
_______________
(1) General and administrative expenses, for the
purpose of calculating dividends, exclude non-cash items.
(2) Replacement reserves reflect the aggregate
annual amount of cash that the Company retains to fund the
replacement of each of its vessels. In addition to the replacement
reserve retained and reinvested at a certain annual rate or
equivalent debt repayment, the Company estimates at the specific
expected replacement date to utilize funds from the proceeds of the
scrap value of the vessels and the assumption of a modest level of
debt to purchase the replacement vessel assuming such replacement
is for a ten-year-old vessel at the ten-year historical mid-cycle
value.
(3) Maintenance reserves are based on an
estimated cost for the drydock, intermediate and special surveys of
the vessels in our fleet over the recurring statutory five-year
survey period. They are used, instead of actual maintenance costs
when incurred, for purposes of calculating the quarterly dividend
to remove the additional cash flow variability during quarters that
drydocks occur.
Corporate Contact:
Andreas Michalopoulos
Chief Executive Officer, Director and Secretary
Telephone: + 30-216-600-2400
Email: amichalopoulos@pshipping.com
Website: www.pshipping.com
Investor and Media Relations:
Edward Nebb
Comm-Counsellors, LLC
Telephone: + 1-203-972-8350
Email: enebb@optonline.net
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