Pingtan Marine Enterprise Reports Financial Results for the Fourth Quarter and Year Ended December 31, 2019
FUZHOU, China, March 16, 2020 /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 financial results for its fourth quarter and year ended December 31, 2019.
Fourth Quarter 2019 Financial Highlights (all results are compared to prior year period)
-- Revenue was $34.6 million, compared to $25.1 million.
-- Gross profit was $8.3 million, compared to $9.1 million, and gross
margin was 24.0%, compared to 36.2%.
-- Net loss attributable to owners of the Company was $1.0 million, or
$(0.01) per basic and diluted share, compared to net loss attributable
to owners of the Company of $3.0 million, or $(0.04) per basic and
diluted share.
2019 Financial Highlights (all results are compared to prior year)
-- Revenue increased by 39.5% to $89.6 million from $64.3 million.
-- Gross profit was $25.2 million, compared to $31.0 million, and gross
margin was 28.1%, compared to 48.3%.
-- Net income attributable to owners of the Company was $5.7 million, or
$0.07 per basic and diluted share, compared to net income attributable
to owners of the Company of $13.4 million, or $0.17 per basic and
diluted share.
Management Comments
Mr. Xinrong Zhuo, Chairman and CEO of the Company, commented, "We are pleased with our operational performance in 2019 and are looking forward to building on that performance in 2020. Following the completion of the modification and rebuilding of 27 large-scale fishing vessels in 2018, in 2019, we completed the modification and rebuilding of another 32 large-scale fishery vessels, including 2 refrigerated transport vessels and 30 fishing vessels. As part of our efforts to expand our fishing fleet and catching capacity, at the end of 2019, we submitted an application to the Chinese government authorities to obtain permits to modify and rebuild 10 vessels. The rebuilt fishing vessels have increased our catch volume and sales volume, and our catch mix shows diversity.
The first quarter of 2020 is a difficult time for many companies, including Pingtan, that conduct their businesses in China due to the coronavirus outbreak. The Company has taken active precautionary measures and gradually resumed work in mid-February to reduce the impact of the pandemic on our production and operations. Although the pandemic has not yet disappeared completely, we remain optimistic about the production and operation activities for the upcoming quarters. Pingtan has been devoted to being a leading supplier of natural seafood and high-quality protein in the Chinese market."
Factors Affecting Pingtan's Results of Operation
Coronavirus Pandemic
In December 2019, a novel strain of coronavirus that causes respiratory illness, or COVID-19, surfaced in Wuhan, China, and began spreading at a high rate in January and February of 2020 and confirmed cases were reported in other parts of the world. In reaction to this outbreak, an increasing number of countries have imposed travel suspensions to and from China following the World Health Organization's "public health emergency of international concern" (PHEIC) announcement on January 30, 2020. Since this outbreak, domestic business activities in China have been disrupted by a series of emergency quarantine measures taken by the government. As a result, the Company's business operations have slowed down and such slow down is expected to continue for at least the first quarter of 2020. The magnitude of this negative effect on the continuity of the Company's business operations in China remains uncertain. These uncertainties impede our ability to conduct our daily operations and could materially and adversely affect our business, financial condition and results of operations.
Indonesia's Moratorium on Fishing License Renewals
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 combat illegal fishing and rectify ocean fishing order. In February 2015, the Company ceased all fishing operations in Indonesia. In November 2015, the Indonesian government announced that the moratorium had concluded, but the MMAF has neither implemented new fishing policies nor resumed the license renewal process. The Company has been paying close attention to any new trends in the MMAF's fishing policy and has been actively exploring new locations to deploy our vessels.
As of December 31, 2019, among the Company's 141 vessels, 12 were located in the Bay of Bengal in India, 69 were located in international waters, 13 were located in the PRC, 37 were located in the Arafura Sea in Indonesia, and the remaining 10 vessels were in the modification and rebuilding projects.
Pingtan's Revenue Break-down By PRC Provincial Division
Year Ended December 31,
2019 2018 2017
Fujian province 66 58 61
% % %
Shandong province 28 15 9
% % %
Zhejiang province 4 3 2
% % %
Guangdong province 1 24 28
% % %
Other areas 1 0 0
% % %
Total 100 100 100
% % %
2019 Selected Financial Highlights
($ in millions, except
share and per share
)
data) Three Months ended
Year Ended
December 31, December 31,
---
2019 2018 2019 2018 2017
Revenue $34.6 $25.1 $89.6 $64.3 $63.2
Cost of Revenue $26.3 $16.0 $64.4 $33.2 $41.1
Gross Profit $8.3 $9.1 $25.2 $31.0 $22.1
Gross Margin 24.0% 36.2% 28.1% 48.3% 34.9%
Net (Loss) Income $(1.1) $(3.2) $6.4 $14.8 $32.5
Basic and Diluted
Weighted Average Shares
Outstanding 79.1 79.1 79.1 79.1 79.1
EPS (in $) $(0.01) $(0.04) $0.07 $0.17 $0.38
Balance Sheet Highlights
($ in millions,
except for book
value per share) 12/31/2019 12/31/2018
---
Cash and Cash
Equivalents $10.1 $2.0
Total Current
Assets $64.3 $15.5
Total Assets $404.1 $247.0
Total Current
Liabilities $88.8 $73.1
Total Long-term
Debt, net of
current portion $160.2 $22.3
Total Liabilities $249.0 $95.4
Shareholders'
Equity $155.1 $151.6
Total Liabilities
and
Shareholders'
Equity $404.1 $247.0
Book Value Per
Share (in $) $1.96 $1.92
Consolidated Financial and Operating Review
Revenue
Revenue for the three months ended December 31, 2019 was $34.6 million compared to $25.1 million for the same period of 2018.
For the year ended December 31, 2019, the Company's revenue was $89.6 million, increasing by 39.5% from $64.3 million for the year ended December 31, 2018. The increase was mainly due to the total of 81 vessels that the Company put into operation in 2019, which led to increased sales volume and revenue.
Gross Margin
The Company's gross margin was 24.0% for the three months ended December 31, 2019, compared to 36.2% in the prior year period.
The Company's gross margin was 28.1% for the year ended December 31, 2019, compared to 48.3% in the same period of 2018. The decrease was primarily attributable to lower average unit sale price of our catches. Our fishing locations were mostly in international waters in 2019 and the catch mix varied from 2018. The catch species with the highest sales volume was sold at lower price, which led to a drop of average unit sale price by 27.9% for the year ended 2019.
Selling Expenses
For the three months ended December 31, 2019, selling expense was $0.82 million, compared to $0.44 million in the prior year period.
For the year ended December 31, 2019, total selling expenses was $2.72 million, compared to $1.62 million in the same period of 2018, an increase of 67.4%. The increase was primarily due to the increase in insurance as a result of more vessels being insured in 2019.
General & Administrative Expenses
For the three months ended December 31, 2019, general and administrative expense was $1.1 million, compared to $0.7 million in the prior year period.
For the year ended December 31, 2019, total general and administrative expense was $15.8 million, compared to $20.0 million in the same period of 2018, a decrease of 20.8%. The decrease was primarily due to the 18.2% decrease in impairment loss on dismantled and deregistered vessels and the 35.7% decrease in depreciation on non-operating vessels.
Net Income (Loss)
Net loss for the three months ended December 31, 2019 was $1.1 million, compared to net loss of $3.2 million in the same period of 2018. The decrease in net loss was mainly due to a decrease of $4.3 million non-cash impairment loss from vessels in the fourth quarter of 2019, compared to the fourth quarter of 2018.
For the year ended December 31, 2019, net income was $6.4 million, compared to $14.8 million in the prior year period, a decrease of 56.9%. The Company recorded an impairment loss of $8.0 million and depreciation of $3.7 million on non-operating vessels, and the two non-cash items subtotaled $11.7 million of operating expenses.
Net Income (Loss) Attributable to Owners of the Company
Net loss attributable to owners of the Company for the three months ended December 31, 2019 was $1.0 million, or $(0.01) per basic and diluted share, compared to net loss attributable to owners of the Company of $3.0 million, or $(0.04) per basic and diluted share, in the same period of 2018.
Net income attributable to owners of the Company for the year ended December 31, 2019 was $5.7 million, or $0.07 per basic and diluted share, compared to net income attributable to owners of the Company of $13.4 million, or $ 0.17 per basic and diluted share, in the same period of 2018.
Conference Call Details
Pingtan also announced that it will discuss financial results in a conference call on Tuesday, March 17, 2020 - 8:30 a.m. ET (March 17, 2020 at 8:30 p.m. Beijing Time).
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: https://78449.themediaframe.com/dataconf/productusers/pme/mediaframe/36296/indexl.html. 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 that engages 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, as amended. Words such as "estimate," "project," "forecast," "plan," "believe," "may," "expect," "anticipate," "intend," "planned," "potential," "can," "expectation" and similar expressions, or the negative of those expressions, may identify 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 anticipated growth and growth strategies; need for additional capital and the availability of financing; locating or re-locating vessels, in foreign waters and related license requirements; our ability to successfully manage relationships with customers, distributors and other important relationships; actions taken by government regulators, such as the Indonesian moratorium; technological changes; competition; demand for our products and services; the deterioration of general economic conditions, whether internationally, nationally or in the local markets in which we operate; the impact of the current coronavirus (COVID-19) pandemic; 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 annual revenue and net income; and other 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. 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:
LiMing Yung (Michael)
Chief Financial Officer
Pingtan Marine Enterprise Ltd.
Tel: +86 591 87271753
michaelyung@ptmarine.net
Maggie Li
Investor Relations Manager
Pingtan Marine Enterprise Ltd.
Tel: +86 591 8727 1753
mli@ptmarine.net
INVESTOR RELATIONS
PureRock Communications Limited
PTmarine@pure-rock.com
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)
(IN U.S. DOLLARS)
For the three Months Ended
December 31,
December 31,
201
9 201
8
REVENUE $
34,554,907 $
25,080,185
COST OF REVENUE 26,262,019 16,004,403
GROSS PROFIT 8,292,888 9,075,782
OPERATING
EXPENSES:
Selling 819,608 440,731
General and
administrative 1,050,003 657,232
General and
administrative-
Depreciation 840,858 1,368,268
Subsidy (1,151,713) (54,883)
Impairment loss 5,405,297 9,715,058
Gain on fixed
assets disposal (223,807) (23,164)
Total Operating
Expenses 6,740,246 12,103,242
INCOME FROM
OPERATIONS 1,552,642 (3,027,460)
OTHER INCOME
(EXPENSE):
Interest income 754,184 2,362
Interest expenses (3,151,494) (291,432)
Loss from cost
method investment (28,158) (5,741)
Loss on the
interest sold (86,603)
Loss on equity
method investment (8,831) (71,209)
Foreign currency
transaction gain 91,339 49,170
Other (expense)
income (219,035) 100,176
Total Other
Expense, net (2,648,598) (216,674)
LOSS
BEFORE INCOME TAXES (1,095,956) (3,244,134)
INCOME TAXES -
NET
LOSS $
(1,095,956) $
(3,244,134)
LESS: NET LOSS
ATTRIBUTABLE TO
THE NON-
CONTROLLING
INTEREST (53,641) (220,593)
NET LOSS
ATTRIBUTABLE TO
OWNERS OF THE
COMPANY $
(1,042,315) $
(3,023,541)
COMPREHENSIVE INCOME:
NET LOSS (1,095,956) (3,244,134)
OTHER
COMPREHENSIVE
INCOME (LOSS)
Unrealized foreign
currency
translation gain
(loss) 205,474 (38,479)
TOTAL COMPREHENSIVE LOSS $
(890,482) $
(3,282,613)
LESS:
COMPREHENSIVE
INCOME (LOSS)
ATTRIBUTABLE TO
THE NON-
CONTROLLING
INTEREST 123,638 (223,668)
COMPREHENSIVE LOSS
ATTRIBUTABLE TO
OWNERS OF THE
COMPANY $
(1,014,120) $
(3,058,945)
NET LOSS PER ORDINARY SHARE ATTRIBUTABLE TO OWNERS
OF THE COMPNAY
Basic and diluted
earnings per
share $
(0.01) $
(0.04)
WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING:
Basic and diluted 79,055,053 79,055,053
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(IN U.S. DOLLARS)
For the Years Ended December 31,
2019 2018 2017
---
REVENUE $
89,622,156 $
64,256,088 $
63,209,687
COST OF REVENUE 64,396,571 33,239,582 41,126,898
GROSS PROFIT 25,225,585 31,016,506 22,082,789
OPERATING EXPENSES:
Selling 2,715,599 1,622,451 1,231,031
General and administrative 4,163,873 4,513,193 4,503,795
General and administrative - depreciation 3,726,061 5,791,557 5,075,609
Subsidy (6,440,299) (8,584,731) (22,177,227)
Impairment loss 7,951,635 9,715,058
(Gain) loss on fixed assets disposal (59,432) 2,105,960 195,375
Total Operating Expenses 12,057,437 15,163,488 (11,171,417)
INCOME FROM OPERATIONS 13,168,148 15,853,018 33,254,206
OTHER INCOME (EXPENSE):
Interest income 780,604 41,446 186,194
Interest expense (6,055,310) (1,210,974) (2,403,213)
Foreign currency transaction (loss) gain (298,304) (157,852) 1,195,875
Gain from cost method investment 312,727 382,627 320,316
Loss on the interest sold (86,603)
Loss on equity method investment (486,803) (192,746) (33,246)
Other (expense) income (954,394) 97,179 (1)
Total Other Expense (6,788,083) (1,040,320) (734,075)
INCOME BEFORE INCOME TAXES 6,380,065 14,812,698 32,520,131
INCOME TAXES
NET INCOME $
6,380,065 $
14,812,698 $
32,520,131
===
LESS: NET INCOME ATTRIBUTABLE TO THE NON-CONTROLLING INTEREST 698,041 1,415,397 2,860,438
NET INCOME ATTRIBUTABLE TO OWNERS OF THE COMPANY $
5,682,024 $
13,397,301 $
29,659,693
===
COMPREHENSIVE INCOME:
NET INCOME 6,380,065 14,812,698 32,520,131
OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized foreign currency translation (loss) gain (2,861,319) (8,387,092) 7,760,460
COMPREHENSIVE INCOME $
3,518,746 $
6,425,606 $
40,280,591
---
LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO THE NON-CONTROLLING INTEREST 469,583 744,463 3,473,736
COMPREHENSIVE INCOME ATTRIBUTABLE TO OWNERS OF THE COMPANY $
3,049,163 $
5,681,143 $
36,806,855
===
NET INCOME PER ORDINARY SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY
Basic and diluted $
0.07 $
0.17 $
0.38
===
WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING:
Basic and diluted 79,055,053 79,055,053 79,055,053
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN U.S. DOLLARS)
December 31,
2019 2018
---
ASSETS
CURRENT ASSETS:
Cash $
10,092,205 $
1,966,855
Accounts receivable, net of allowance for doubtful
accounts 9,273,446 6,307,492
Due from related parties 12,477,777
Inventories, net of reserve for inventories 30,527,752 5,840,207
Prepaid expenses 1,354,129 644,824
Other receivables 613,384 698,450
Total Current Assets 64,338,693 15,457,828
OTHER ASSETS:
Cost method investment 3,010,235 3,059,797
Equity method investment 27,923,464 28,872,521
Prepayment for long-term assets 49,040,338
Right-of-use asset 438,254
Property, plant and equipment, net 259,377,729 199,571,425
Total Other Assets 339,790,020 231,503,743
Total Assets $
404,128,713 $
246,961,571
===
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $
7,951,766 $
30,642,125
Accounts payable - related parties 1,707,217 3,244,843
Short-term bank loans 10,034,116 5,085,139
Long-term bank loans - current portion 57,122,789 8,487,295
Accrued liabilities and other payables 11,428,018 6,058,548
Lease liability- current liability 375,922
Due to related parties 168,328 19,555,277
Total Current Liabilities 88,788,156 73,073,227
OTHER LIABILITIES:
Lease liability 32,203
Long-term bank loans - non-current portion 160,230,498 22,329,234
Total Liabilities 249,050,857 95,402,461
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Equity attributable to owners of the company:
Ordinary shares ($0.001 par value; 125,000,000 shares
authorized; 79,055,053 shares issued and outstanding
at December 31, 2019 and 2018) 79,055 79,055
Additional paid-in capital 81,682,599 81,682,599
Retained earnings 54,286,454 49,593,069
Statutory reserve 15,748,751 14,760,112
Accumulated other comprehensive loss (16,080,908) (13,448,047)
Total equity attributable to owners of the company 135,715,951 132,666,788
Non-controlling interest 19,361,905 18,892,322
Total Shareholders' Equity 155,077,856 151,559,110
Total Liabilities and
Shareholders' Equity $
404,128,713 $
246,961,571
===
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN U.S. DOLLARS)
For the Years Ended December 31,
2019 2018 2017
---
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $
6,380,065 $
14,812,698 $
32,520,131
Adjustments to reconcile net income from operations to net cash provided by (used in) operating activities:
Depreciation 11,308,882 9,141,975 8,965,553
Increase (decrease) in allowance for doubtful accounts 8,050 (66,532) (194,278)
Increase (decrease) in reserve for inventories (142,370) 429,267
Loss on equity method investment 486,803 192,746 33,246
Loss on the interest sold 86,603
Loss (gain)on disposal of fixed assets (59,432) 2,016,992 195,376
Impairment loss of fishing vessels 7,943,585 9,715,058
Changes in operating assets and liabilities:
Accounts receivable (3,110,730) 6,373,815 (765,708)
Inventories (24,918,904) (2,970,908) 5,607,279
Advances to suppliers 4,078,230
Prepaid expenses (727,857) (559,629) (98,606)
Prepaid expenses - related parties 536,665
Other receivables 74,967 (450,948) 32,439,871
Other receivables - related party 1,377,487
Accounts payable (22,443,999) 1,044,710 3,005,441
Accounts payable - related parties (1,501,793) 1,584,351 (885,433)
Accrued liabilities and other payables 5,527,508 995,836 254,242
Accrued liabilities and other payables - related party (1,290) (36,918) (18,606,716)
Due to related parties (9,483,868) 11,080,369 (23,354)
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (30,573,780) 53,302,882 68,439,426
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (118,468,793) (60,930,363) (49,860,416)
Prepayment made for long-term assets (49,592,695)
Proceeds from disposal of property, plant and equipment 72,480
Proceeds from government grants for fishing vessels construction 35,524,824 5,223,804 6,600,906
Payments for equity method investment (296,217)
NET CASH USED IN INVESTING ACTIVITIES (132,464,184) (55,706,559) (43,555,727)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term bank loans 10,147,133 14,960,559 14,453,010
Repayments of short-term bank loans (5,062,771) (14,622,143) (21,673,260)
Proceeds from long-term bank loans 208,023,483 5,478,766
Repayments of long-term bank loans (18,880,916) (5,893,554) (17,773,038)
Advances from related parties (10,046,010) 3,891,085 4,328,693
Loans issued to related parties (12,618,318)
Payments made for dividend (2,371,652) (3,162,203)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 171,562,601 1,443,061 (23,826,798)
EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS (399,287) (899,256) (962,492)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 8,125,350 (1,859,872) 94,409
CASH AND CASH EQUIVALENTS - beginning of year 1,966,855 3,826,727 3,732,318
CASH AND CASH EQUIVALENTS - end of year $
10,092,205 $
1,966,855 $
3,826,727
===
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest $
6,419,569 $
1,311,455 $
2,639,039
===
Income taxes
$
$
$ -
RECONCILIATION TO AMOUNTS ON CONSOLIDATED BALANCE SHEETS:
Cash and cash equivalents 10,092,205 1,966,855 2,005,540
Restricted cash 1,821,187
TOTAL CASH, CASH EQUIVALENTS AND RESTRICTED CASH $
10,092,205 $
1,966,855 $
3,826,727
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Acquisition of property and equipment by decreasing prepayment for long-term assets
$ $
11,431,500 $
1,036,761
Property and equipment acquired on credit as payable
$ $
26,488,534 $
215,202
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SOURCE Pingtan Marine Enterprise Ltd.
