Pingtan Marine Enterprise Reports Financial Results for the Second Quarter and Six Months Ended June 30, 2017; Exceeds Previously Provided EPS Guidance
Company Reports Second Quarter EPS of $0.11; Exceeds Previously Announced 2017 Second Quarter EPS Guidance of Between $0.08 and $0.10
Company to Hold Conference Call on Thursday, August 10, 2017, at 8:30 AM ET
FUZHOU, China, Aug. 9, 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 second quarter and six months ended June 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 to its
earnings performance.
-- July 27, 2017: The Company announced it has entered into a strategic
cooperation framework agreement with one of China's largest e-commerce
retailers, JD.com, to serve as JD's sole supplier for ribbonfish, tiger
prawn and conger eel products harvested from the Arafura Sea, the Bay of
Bengal and the Indo-Pacific Waters.
Management Comments
Mr. Xinrong Zhuo, Chairman and CEO of the Company, commented, "We were pleased to continue to deliver strong operating and financial results through our increased operating fishing vessels and business expansion since the second half of 2016. The second quarter of 2017 was a milestone for Pingtan, as we recently announced that Pingtan signed a strategic cooperation framework agreement with one of China's largest e-commerce retailers, JD.com. Through this strategic cooperation, Pingtan will serve as exclusive sole supplier for ribbonfish, tiger prawn and conger eel products harvested from the Arafura Sea, the Bay of Bengal and the Indo-Pacific Waters for JD Fresh Food, and we will work together with JD on the continuous innovation of online seafood retail business model. We believe that cooperation with JD will lay a solid foundation for Pingtan to further penetrate into the food consumer market, and JD's vast online platform would generate tremendous publicity for Pingtan's brand nationwide. Meanwhile, we remain focused on expanding our fishing business by continuously seeking new fishing territories and new types of fishing vessels that harvest higher margin products."
Factors Affecting Pingtan's Results of Operation - The Indonesian government's moratorium on fishing licenses renewals:
As previously disclosed in our Forms 10-K and 10-Q filed since 2015, in early December 2014, the Indonesian government introduced a six-month moratorium on issuing new fishing licenses and renewals so that the country's Ministry of Maritime Affairs and Fisheries ("MMAF") could monitor the operations of existing fleets and fight illegal fishing activities. As a result, all licensed fishing vessels operating in Indonesian waters were informed by the Indonesian government to operate within strict guidelines and subsequently to cease operation, in order to avoid potential enforcement actions by the Indonesian Navy, such as boat seizures. To cooperate and comply with the Indonesian government's fishing license check procedures, the Company reduced its operations in January 2015. Since February 2015, Pingtan has ceased operations of its vessels in Indonesian waters. Since the Company derives a majority of its revenue from this area, this ban caused a significant drop in production.
In November 2015, the Indonesian government announced that the moratorium had concluded. The Company's expectation is that the MMAF will implement new fishing policies and resume the license renewal process, although this has not yet occurred. In the interim, the Company's financial results will continue to be adversely affected by this moratorium.
In the meantime, the Company deployed 13 vessels to the Indo-Pacific waters and 2 squid jigging vessels to the international waters of Southwest Atlantic and Southeast Pacific Oceans in the second half of fiscal 2016. In the first quarter of 2017, the Company deployed 4 longline fishing vessels, 2 squid jigging vessels and 1 refrigerated transport vessel to international waters, and expects to deploy 2 more squid jigging vessels after renovation and replacement.
Second Quarter 2017 Financial Highlights (all results are compared to prior year period)
-- As a result of deploying into operation more of the Company's fishing
vessels, revenue increased 1,596% to $35.7 million from $2.1 million.
-- Gross profit was $11.1 million compared to gross loss of $3.0 million,
and gross margin was 31.2% compared to (144.5) %.
-- Net income attributable to owners of the Company was $9.0 million, or
$0.11 per basic and diluted share, compared to net loss of $4.2 million,
or $0.05 per basic and diluted share.
Second Quarter 2017 Selected Financial Highlights
($ in millions, except per Three Months ended June
share data) 30,
--------------------------
2017 2016
---- ----
(Unaudited) (Unaudited)
Revenue $35.7 $2.1
Cost of Revenue $24.6 $5.1
Gross Profit (Loss) $11.1 $(3.0)
Gross Margin 31.2% (144.5)%
Net income(loss) attributable
to owners of the Company $9.0 $(4.2)
Basic and Diluted Weighted
Average Shares Outstanding 79.1 79.1
EPS (in $) $0.11 $(0.05)
Balance Sheet Highlights
($ in millions, except per share
data) 6/30/2017 12/31/2016
-------------------------------- --------- ----------
(Unaudited) (Audited)
---------- --------
Cash and Cash Equivalents $11.40 $0.80
Total Current Assets 38 60.8
Total Assets 213.7 226.5
Total Current Liabilities 61.8 64.9
Total Long-term Debt, net of
current portion 19.5 21.9
Total Liabilities 81.3 86.8
Shareholders' Equity 132.4 139.7
Total Liabilities and
Shareholders' Equity 213.7 226.5
Book Value Per Share (in $) $1.67 $1.77
Consolidated Financial and Operating Review
Revenues
Revenues for the three months ended June 30, 2017 were $35.7 million an increase of 1,596% from $2.1 million of the same period in 2016. The increase was mainly attributable to our business expansion resulting from more fishing vessels placed in operation.
For the six months ended June 30, 2017, the Company's revenues were $41.4 million compared to $6.2 million in the first half of 2016. The increase was primarily due to increase in sales volume due to the business expansion, as well as increase in average unit sale price due to the different sales mix.
Gross Margin
The Company's gross margin was 31.2% for the three months ended June 30, 2017 compared to (144.5) % in the prior-year period. The significant increase was primarily attributable to the decrease in the unit production cost of fish resulting from the increase in fishing activities by deploying more fishing vessels into operation.
For the six months ended June 30, 2017, gross margin increased to 27% from (102.2) % in the same period of 2016, the increase was primarily due to the same reasons described above.
Selling Expenses
Selling expenses were $0.2 million for the three months ended June 30, 2017 compared to $0.1 million in the prior-year period.
For the six months ended June 30, 2017, selling expenses were $0.6 million compared to $0.4 million in the same period of 2016.
General & Administrative Expenses
For the three months ended June 30, 2017, general and administrative expenses were $1.3 million compared to $0.9 million in the prior-year period.
For the six months ended June 30, 2017, general and administrative expenses were $2.3 million compared to $2.4 million in the same period of 2016.
Net Income/Loss
For the three months ended June 30, 2017, net income attributable to owners of the Company was $9.0 million, or $0.11 per basic and diluted share, compared to net loss attributable to owners of the Company of $4.2million, or $(0.05) per basic and diluted share, in the same period of 2016. The increase was primarily due to the factors described above.
For the six months ended June 30, 2017, net income attributable to owners of the Company was $18.9 million, or $0.24 per basic and diluted share, compared to net loss attributable to owners of the Company of $9.3million, or $(0.12) 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, August 10, 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/q2-2017. 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 expectations with respect to its strategic partnership with JD and continued expansion into new fishing territories . Readers are cautioned that actual results could differ materially from those expressed in any forward-looking statements. 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 on JD's e-commerce platform, 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; 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 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 For the Six Months
Ended June 30, Ended June 30,
-------------- --------------
2017 2016 2017 2016
---- ---- ---- ----
REVENUE $35,695,881 $2,104,351 $41,357,021 $6,219,449
COST OF REVENUE 24,576,296 5,145,118 30,174,103 12,572,928
---------- --------- ---------- ----------
GROSS PROFIT (LOSS) 11,119,585 (3,040,767) 11,182,918 (6,353,479)
---------- ---------- ---------- ----------
OPERATING EXPENSES:
Selling 178,575 71,199 567,293 414,219
General and
administrative 1,259,793 910,813 2,347,665 2,378,284
Total Operating Expenses 1,438,368 982,012 2,914,958 2,792,503
--------- ------- --------- ---------
INCOME(LOSS) FROM OPERATIONS 9,681,217 (4,022,779) 8,267,960 (9,145,982)
--------- ---------- --------- ----------
OTHER INCOME (EXPENSE):
Interest income 4,043 902 151,426 3,269
Interest expense (648,333) (395,859) (1,351,409) (918,124)
Foreign currency transaction
gain(loss) 446,431 (477,077) 544,882 (456,280)
Grant income 30,365 96 12,749,640 154,543
Gain from cost method
investment 314,818 381,537 314,818 381,537
Loss on equity method
investment (13,915) (7,811) (20,167) (18,127)
Other expense (3,812) (153) (3,812) (417)
Total Other Income
(Expense), net 129,597 (498,365) 12,385,378 (853,599)
------- -------- ---------- --------
INCOME (LOSS) BEFORE INCOME TAXES 9,810,814 (4,521,144) 20,653,338 (9,999,581)
INCOME TAXES - 587 - 1,000
--- --- --- -----
NET INCOME (LOSS) $9,810,814 $(4,521,731) $20,653,338 $(10,000,581)
LESS: NET INCOME (LOSS) ATTRIBUTABLE TO THE NON-CONTROLLING
INTEREST 853,403 (296,844) 1,775,773 (675,315)
NET INCOME (LOSS) ATTRIBUTABLE TO OWNERS OF THE
COMPANY $8,957,411 $(4,224,887) $18,877,565 $(9,325,266)
COMPREHENSIVE INCOME (LOSS):
NET INCOME (LOSS) 9,810,814 (4,521,731) 20,653,338 (10,000,581)
OTHER COMPREHENSIVE
GAIN
Unrealized foreign currency
translation gain 2,041,844 (4,255,671) 2,682,892 (3,376,248)
--------- ---------- --------- ----------
COMPREHENSIVE INCOME
(LOSS) $11,852,658 $(8,777,402) $23,336,230 $(13,376,829)
LESS: COMPREHENSIVE
INCOME (LOSS)
ATTRIBUTABLE TO THE
NON-CONTROLLING
INTEREST 1,014,545 (633,494) 1,987,571 (942,942)
COMPREHENSIVE INCOME
(LOSS) ATTRIBUTABLE
TO OWNERS OF THE
COMPANY $10,838,113 $(8,143,908) $21,348,659 $(12,433,887)
NET INCOME (LOSS) PER ORDINARY SHARE ATTRIBUTABLE TO OWNERS
OF THE COMPANY
Basic and diluted $0.11 $(0.05) $0.24 $(0.12)
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)
June 30, December 31,
2017 2016
---- ----
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash $11,415,456 $820,396
Restricted cash 3,262,282 2,911,922
Accounts
receivable, net
of allowance for
doubtful accounts 12,639,452 11,322,726
Due from related
parties - -
Inventories, net
of reserve for
inventories 4,935,603 8,811,111
Advances to suppliers 2,458,272 3,969,351
Prepaid expenses 53 8,145
Prepaid expenses -
related party 1,126,753 522,337
Other receivables 2,180,441 31,835,456
Other receivables
-related party - 639,917
Total Current Assets 38,018,312 60,841,361
---------- ----------
OTHER ASSETS:
Cost method
investment 3,099,906 3,027,245
Equity method
investment 29,451,951 28,493,273
Prepayment for
long-term assets 11,166,569 11,913,912
Property, plant
and equipment,
net 131,944,322 122,196,594
Total Other Assets 175,662,748 165,631,024
----------- -----------
Total Assets $213,681,060 $226,472,385
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $2,452,694 $916,737
Accounts payable -
related parties 8,657,310 2,560,760
Short-term bank
loans 22,658,436 21,554,636
Long-term bank
loans - current
portion 11,838,687 17,298,544
Accrued
liabilities and
other payables 5,884,727 4,399,536
Accrued
liabilities and
other payables -
related party 8,281,687 18,147,152
Due to related
parties 2,056,230 43,354
Total Current Liabilities 61,829,771 64,920,719
OTHER LIABILITIES:
Long-term bank
loans - non-
current portion 19,485,120 21,839,412
Total Liabilities 81,314,891 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 34,734,679 17,438,215
Statutory reserve 9,391,827 9,391,827
Accumulated other
comprehensive
loss (10,407,957) (12,879,051)
Total equity
attributable to
owners of the
company 115,704,475 125,038,131
Non-controlling
interest 16,661,694 14,674,123
Total Shareholders' Equity 132,366,169 139,712,254
----------- -----------
Total Liabilities and Shareholders'
Equity $213,681,060 $226,472,385
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN U.S. DOLLARS)
For the Six Months
Ended June 30,
--------------
2017 2016
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $20,653,338 $(10,000,581)
Adjustments to
reconcile net income
(loss) from
operations to net
cash
provided by
operating
activities:
Depreciation 4,292,368 3,303,423
Increase(decrease)
in allowance for
doubtful
accounts 202,678 (150,594)
Increase in
reserve for
inventories - 2,800,637
Loss on equity
method
investment 20,167 18,127
Loss on disposal of
fixed assets 3,812 -
Changes in operating
assets and
liabilities:
Accounts
receivable (1,233,136) 9,347,461
Inventories 4,030,297 (7,696,280)
Advances to
suppliers 1,584,068 299,809
Prepaid expenses 8,172 1,806
Prepaid expenses
-related party (583,668) 1,789,653
Other receivables 29,995,368 414
Other receivables
-related party 927,098 -
Accounts payable (23,390) (14,213)
Accounts payable
-related
parties 5,951,364 1,344,800
Accrued
liabilities and
other payables 1,360,541 509,165
Accrued
liabilities and
other payables -
related party (12,734,415) -
Due to related
parties (20,026) -
------- ---
NET CASH PROVIDED BY OPERATING ACTIVITIES 54,434,636 1,553,627
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of
property, plant
and equipment (38,750,974) (417,877)
Proceeds from
government
grants for
fishing vessels
construction 2,911,335
Prepayments made
for long-term
assets - (38,406,218)
Payments for
related party -
Payments for
equity method
investment (291,134) -
Proceeds from
transferring
equity method
investment share - 15,301,282
--- ----------
NET CASH USED IN INVESTING ACTIVITIES (36,130,773) (23,522,813)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from
short-term bank
loans 8,500,000 8,118,455
Repayments of
short-term bank
loans (7,921,692) (7,204,822)
Proceeds from
long-term bank
loans 19,126,603
Repayments of
long-term bank
loans (8,632,109) (6,258,225)
Increase in
restricted cash (276,577) (1,530,128)
Advances from
related parties 2,032,902 2,653,620
Payments made for
dividend (1,581,101) (1,581,101)
---------- ----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (7,878,577) 13,324,402
---------- ----------
EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS 169,774 (199,792)
------- --------
NET (DECREASE)INCREASE IN CASH AND CASH EQUIVALENTS 10,595,060 (8,844,576)
CASH AND CASH EQUIVALENTS - beginning of period 820,396 11,448,684
------- ----------
CASH AND CASH EQUIVALENTS - end of period $11,415,456 $2,604,108
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest $1,412,542 $1,276,407
========== ==========
Income taxes $ - $413
=== ====
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Acquisition of
property and
equipment by
decreasing
prepayment for long-
term assets $1,018,967 $31,138,109
Property and
equipment acquired
on credit as payable $1,516,341 $ -
===
Offset other
receivables -
related parties
against due to
related parties $ - $4,014,910
===
SOURCE Pingtan Marine Enterprise Ltd.
