Pingtan Marine Enterprise Reports Financial Results For The Second Quarter Ended June 30, 2020
FUZHOU, China, Aug. 17, 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 second quarter and first six months ended June 30, 2020.
Second Quarter 2020 Financial Highlights (Year-on-Year Comparisons)
-- Revenue was $23.5 million compared to $25.5 million.
-- Gross profit was $2.2 million compared to $9.3 million.
-- Net loss was $1.7 million compared to net income of $5.0 million.
-- Net loss attributable to owners of the Company was $1.6 million, or
$(0.02) per basic and diluted share, compared to net income attributable
to owners of the Company of $4.6 million, or $0.06 per basic and diluted
share.
Management Comments
Mr. Xinrong Zhuo, Chairman and CEO of the Company, commented, "Although the COVID-19 pandemic appears to be under control in China, the situation is still severe in many countries and regions of the world, and the pandemic has adversely affected the global market and economy. In the second quarter of 2020, a second wave of regional spreading of the coronavirus occurred in some cities in China, including Beijing, and some cases were related to seafood markets, which had an impact on the prices of marine catches. In the second quarter of 2020, although we saw a decrease of $1.7 million in revenue during the quarter compared to the same period in 2019, our sales volume peaked to 21.8 million kg, an increase of 41% compared to the same period in 2019 and the highest record of single-quarter sales volume in the last five years. With the regional spreading of the coronavirus generally contained, the Chinese market is gradually recovering, and the catering and entertainment industry is resuming normal operations. Although we are not able to estimate the future impact of the COVID-19 pandemic at this time, we believe that the Chinese consumers' demand for seafood will return and grow during the second half of 2020. In reaction to the potential market variations and to assist the Company in its development and expansion of catch species, we are building a large-scale Antarctica krill fishing and processing vessel with a gross tonnage of 8600 and overall length of 107 meters. Upon completion and operation of this vessel, our fishing areas will be expanded to the Antarctic waters and our fishing capacity will be further enhanced."
Factors Affecting Pingtan's Results of Operations
COVID-19 pandemic
The recent COVID-19 pandemic has spread rapidly throughout the world and significantly curtailed the global economic activities. As the first country to be engulfed in the pandemic, China introduced strict emergency quarantine measures and travel restrictions to contain the pandemic, which had a big impact on China's economy in the first half of 2020. Although it was generally believed that the pandemic was under control in the second quarter, the PRC government continued to take precautionary quarantine measures to avoid additional outbreaks of the pandemic, which had an adverse impact on the economic activities in China.
The continued precautionary quarantine measures by the PRC government and travel restrictions implemented by some countries have had a significant impact on many sectors across China, which has also adversely affected the Company's operations in China, despite the PRC government's efforts to revive the economy. To reduce the impact on its production and operation, the Company has taken and may continue to take actions in response as necessary, including but not limited to continued shifts in work system, paid leave and reducing the number of foreign crews on its vessels. Its management is focused on mitigating the effects of COVID-19 on its business operations while protecting the health of its employees. The Company will continue to actively monitor the situation and may take further actions that alter its business operations as may be required by local authorities or that the Company determines in the best interests of its employees, customers, partners and suppliers.
Some of Pingtan's customers are fish processing plants that exports processed fish products to foreign countries. These customers tended to reduce or postpone their purchases from the Company in the initial stage of the pandemic and have now started adjusting their business strategies in relation to exportation or domestic sale. These customers and other customers of the Company may further reduce or postpone their purchases in the future due to the pandemic, which may lead to an increase in inventory. The Company may take necessary de-stocking measures, such as lowering the selling prices of catches and extending the term of payment for certain accounts receivable, which may adversely affect the financial conditions and working capital of the Company.
The situation created by the COVID-19 pandemic has led to an unprecedented economic uncertainty globally. However, the extent of the impact on the Company's financial condition and results of operations is still highly uncertain and will depend on future developments, such as the ultimate duration and scope of the outbreak, its impact on its customers and exporters, how quickly normal economic conditions, operations, and the demand for its products can resume and whether the pandemic leads to recessionary conditions in China.
Although both the PRC government and the Company have taken measures in response to the pandemic, the Company anticipates that its results of operations will continue to be impacted by this pandemic in the third and fourth quarters of 2020, and is unable to reasonably estimate the extent of the impact on its full-year results of operations, its liquidity or its overall financial position.
The Company's Fishing Fleet
As of June 30, 2020, of the Company's 143 vessels, 69 were located in the international waters, 12 were located in the Bay of Bengal in India, 13 were located in the PRC, 37 were located in the Arafura Sea in Indonesia, 10 just completed the rebuilding projects and were preparing for operation in the international waters, 1 transport vessel was in the modification and rebuilding stage and 1 new krill fishing and processing vessel was in building stage.
Second Quarter 2020 Selected Financial Highlights
($ in millions, Three Months
except shares ended
and per share June 30
,
data)
---
2020 2019
Revenue $23.5 $25.5
Cost of Revenue $21.3 $16.2
Gross Profit $2.2 $9.3
Gross Margin 9.2% 36.4%
Net (Loss) Income $(1.7) $5.0
Basic and Diluted
Weighted Average
Shares 79.1 79.1
EPS (in $) $(0.02) $0.06
Balance Sheet Highlights
($ in millions, 6
/3 12
/31/201
except for 0
/20 9
book value per 20
share)
---
Cash and Cash
Equivalents $3.4 $10.1
Total Current
Assets $165.6 $64.3
Total Assets $557.4 $404.1
Total Current
Liabilities $183.1 $88.8
Long-term bank
loans, non-
current
portion $214.4 $160.2
Total
Liabilities $397.5 $249.1
Shareholders'
Equity $160.0 $155.1
Total
Liabilities
and
Shareholders'
Equity $557.4 $404.1
Book Value Per
Share (in $) $2.02 $1.96
Consolidated Financial and Operating Review
Revenue
Revenue for the three months ended June 30, 2020 was $23.5 million, a decrease of $2.0 million, or 7.9%, from $25.5 million for the same period in 2019. Sales volume increased by 41.0% to 21.8 million KG in the three months ended June 30, 2020 from 15.4 million KG in the same period of 2019. The decrease in revenue was primarily attributable to the different sales mix and the decrease in the average unit sale price, despite the increase in sales volume due to more vessels in operations. Average unit sale price decreased 34.5% in the three months ended June 30, 2020 as compared to the three months ended June 30, 2019.
For the six months ended June 30, 2020, the Company's revenues were $40.8 million compared to $43.9 million in the first half of 2019, a decrease of $3.1 million, or 7.1%. Sales volumes in the six months ended June 30, 2020 increased by 46.0% to 35.3 million KG from 24.2 million KG in the six months ended June 30, 2019. Average unit sale price decreased by 36.3% in the six months ended June 30, 2020 as compared to the six months ended June 30, 2019. The decrease is due to the same reasons described above.
Gross Margin
The Company's gross margin was 9.2% for the three months ended June 30, 2020, compared to 36.4% in the prior year period. The decrease in gross margin for the three months ended June 30, 2020 as compared to the same period of 2019 is due to the decrease in average unit sale price by 34.5% while the cost per unit had a slight decrease. A key species of the Company's sales mix was Indian Ocean squid whose market price was on the low side, and the market price of frozen seafood was affected due to the COVID-19 pandemic, which together led to a decrease in the average unit sale price of sales mix.
For the six months ended June 30, 2020, gross margin decreased to 19.4% from 30.4% in the same period of 2019. The decrease in gross margin for the six months ended June 30, 2020 is due to the same reasons described above.
Selling Expenses
For the three months ended June 30, 2020, selling expenses were $1.0 million compared to $0.5 million in the prior year period. The increase was primarily due to the increase in insurance, storage fees and other miscellaneous selling expenses.
For the six months ended June 30, 2020, selling expenses were $2.0 million compared to $1.2 million in the same period of 2019. The increase is due to the same reasons described above.
General & Administrative Expenses
For the three months ended June 30, 2020, general and administrative expenses were $1.6 million, compared to $2.1 million in the prior year period, a decrease of 25.1%. The decrease was primarily due to the decrease in compensation and related benefits and other general and administrative expenses, the increase in bad debt recovery and no impairment loss recorded for the three months ended June 30, 2020 as compared to an impairment loss of $0.2 million for the three months ended June 30, 2019.
For the six months ended June 30, 2020, general and administrative expenses were $3.6 million, compared to $6.9 million in the prior year period, a decrease of 48.6%. The decrease was primarily due to the decrease in depreciation of non-operating vessels, compensation and related benefits, other general and administrative expenses and no impairment loss recorded for the six months ended June 30, 2020 as compared to an impairment loss $2.5 million for the six months ended June 30, 2019.
Net (Loss) Income
Net loss for the three months ended June 30, 2020 was $1.7 million, compared to net income of $5.0 million in the same period of 2019.
Net income for the six months ended June 30, 2020 was 6.8 million, compared to net income of $3.1 million in the same period of 2019.
Net (Loss) Income Attributable to Owners of the Company
Net loss attributable to owners of the Company for the three months ended June 30, 2020 was $1.6 million, or $(0.02) per basic and diluted share, compared to net income attributable to owners of the Company of $4.6 million, or $0.06 per basic and diluted share, in the same period of 2019.
Net income attributable to owners of the Company for the six months ended June 30, 2020 was $6.1 million, or $0.08 per basic and diluted share, compared to net income attributable to owners of the Company of $2.7 million, or $0.03 per basic and diluted share, in the same period of 2019.
Conference Call Details
Pingtan will discuss the financial results for the second quarter of 2020 during a conference call on Tuesday, August 18, 2020 - 8:30 a.m. ET.
The dial-in numbers are:
Live Participant Dial-in (Toll Free): +1 (877) 407-0310
Live Participant Dial-in (International): +1 (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/40260/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 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, 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 on the Company's financial condition, business operations and liquidity; the impact of COVID-19 on our customers and distributors; 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 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, except as required by law.
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
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(IN U.S. DOLLARS)
For the Three Months Ended
For the Six Months Ended
June 30, June 30,
2020 2019 2020 2019
REVENUE $
23,463,133 $
25,463,094 $
40,770,133 $
43,887,303
COST OF REVENUE 21,299,920 16,196,280 32,854,363 30,539,838
GROSS PROFIT 2,163,213 9,266,814 7,915,770 13,347,465
OPERATING EXPENSES:
Selling 1,046,519 535,276 1,948,170 1,245,205
General and administrative 795,332 1,365,250 2,065,475 4,960,640
General and administrative - depreciation 789,334 749,056 1,500,767 1,971,217
Subsidy (564,095) (8,338,088)
Loss on fixed assets disposal 166,152 166,152
Total Operating Expenses 2,067,090 2,815,734 (2,823,676) 8,343,214
INCOME FROM OPERATIONS 96,123 6,451,080 10,739,446 5,004,251
OTHER INCOME (EXPENSE):
Interest income 1,162,486 17,773 2,362,612 20,289
Interest expense (2,936,529) (1,598,082) (5,835,425) (2,127,247)
Foreign currency transaction gain (loss) 21,718 (139,715) (344,691) (49,631)
Gain from cost method investment 132,753 347,651 132,753 347,651
Loss on equity method investment (143,015) (271,227) (268,543) (381,843)
Other income (expense) 5,084 226,487 (30,456) 252,158
Total Other Expense, net (1,757,503) (1,417,113) (3,983,750) (1,938,623)
(LOSS) INCOME BEFORE INCOME TAXES (1,661,380) 5,033,967 6,755,696 3,065,628
INCOME TAXES
NET (LOSS) INCOME $
(1,661,380) $
5,033,967 $
6,755,696 $
3,065,628
LESS: NET (LOSS) INCOME ATTRIBUTABLE TO THE NON-CONTROLLING INTEREST (85,370) 454,923 667,016 373,823
NET (LOSS) INCOME ATTRIBUTABLE TO OWNERS OF THE COMPANY $
(1,576,010) $
4,579,044 $
6,088,680 $
2,691,805
COMPREHENSIVE INCOME (LOSS):
NET (LOSS) INCOME (1,661,380) 5,033,967 6,755,696 3,065,628
OTHER COMPREHENSIVE (LOSS) INCOME
Unrealized foreign currency translation gain (loss) (166,176) (3,066,793) (1,854,615) (167,444)
COMPREHENSIVE (LOSS) INCOME $
(1,827,556) $
1,967,174 $
4,901,081 $
2,898,184
LESS: COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO (98,734) 209,407 518,480 334,384
THE NON-CONTROLLING INTEREST
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO $
(1,728,822) $
1,757,767 $
4,382,601 $
2,563,800
OWNERS OF THE COMPANY
NET(LOSS)INCOME PER ORDINARY SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY
Basic and diluted $
(0.02) $
0.06 $
0.08 $
0.03
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
(IN U.S. DOLLARS)
June 30, December 31,
2020 2019
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $
3,405,523 $
10,092,205
Restricted cash 10,770,608
Accounts receivable, net of allowance for doubtful accounts 12,624,501 9,273,446
Due from related parties 81,252,639 12,477,777
Inventories, net of reserve for inventories 56,605,991 30,527,752
Prepaid expenses 750,349 1,354,129
Other receivables 219,325 613,384
Total Current Assets 165,628,936 64,338,693
OTHER ASSETS:
Cost method investment 2,966,311 3,010,235
Equity method investment 27,249,283 27,923,464
Prepayment for long-term assets 63,950,903 49,040,338
Right-of-use asset 253,628 438,254
Property, plant and equipment, net 297,397,430 259,377,729
Total Other Assets 391,817,555 339,790,020
Total Assets $
557,446,491 $
404,128,713
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $
17,363,276 $
7,951,766
Accounts payable - related parties 2,366,568 1,707,217
Short-term bank loans 90,684,370 10,034,116
Long-term bank loans - current portion 60,880,006 57,122,789
Accrued liabilities and other payables 11,579,704 11,428,018
Lease liability- current liability 222,567 375,922
Due to related parties 18,354 168,328
Total Current Liabilities 183,114,845 88,788,156
OTHER LIABILITIES:
Lease liability 32,203
Long-term bank loans - non-current portion 214,352,709 160,230,498
Total Liabilities 397,467,554 249,050,857
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Equity attributable to owners of the company:
Ordinary shares ($0.001 par value; 125,000,000 shares 79,055 79,055
authorized; 79,055,053 shares issued and outstanding at
June 30, 2020 and December 31, 2019)
Additional paid-in capital 81,682,599 81,682,599
Retained earnings 60,375,134 54,286,454
Statutory reserve 15,748,751 15,748,751
Accumulated other comprehensive loss (17,786,987) (16,080,908)
Total equity attributable to owners of the company 140,098,552 135,715,951
Non-controlling interest 19,880,385 19,361,905
Total Shareholders' Equity 159,978,937 155,077,856
Total Liabilities and Shareholders' Equity $
557,446,491 $
404,128,713
PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN U.S. DOLLARS)
For the Six Months Ended
June 30,
2020 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $
6,755,696 $
3,065,628
Adjustments to reconcile net income from operations to net cash provided by operating activities:
Depreciation 6,672,732 5,071,259
Increase in allowance for doubtful accounts 57,205
Increase (decrease) in reserve for inventories 2,000,619 (358,040)
Loss on equity method investment 268,543 381,843
Impairment loss of fishing vessels 2,475,442
Changes in operating assets and liabilities:
Accounts receivable (3,567,172) (2,452,909)
Inventories (28,703,844) (2,426,497)
Prepaid expenses 587,974 2,569
Other receivables 387,716 (375,533)
Other receivables - related party (20,230)
Accounts payable 9,592,030 1,973,993
Accounts payable - related parties 688,894 (2,896,036)
Advance from customers (824,813)
Accrued liabilities and other payables 1,145,268 2,572,773
Accrued liabilities and other payables - related party (1,290)
Due to related parties (323,577) 1,221,527
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (5,262,729) 8,234,499
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (85,240,006) (59,984,190)
Proceeds from government grants for fishing vessels construction 20,893,357 3,623,171
Deposit for purchase of land use right (7,373,762)
NET CASH USED IN INVESTING ACTIVITIES (64,346,649) (63,734,781)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of short-term bank loans 81,343,591
Proceeds from long-term bank loans 76,076,167 100,283,152
Repayments of long-term bank loans (14,611,982) (4,719,207)
Due to related parties (10,220,387)
Due from related parties (28,678,209)
Advance to related party-HL (69,423,710)
NET CASH PROVIDED BY FINANCING ACTIVITIES 73,384,066 56,665,349
EFFECT OF EXCHANGE RATE ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH 309,238 41,357
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 4,083,926 1,206,424
CASH, CASH EQUIVALENTS AND RESTRICTED CASH - beginning of period 10,092,205 1,966,855
CASH, CASH EQUIVALENTS AND RESTRICTED - end of period $
14,176,131 $
3,173,279
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest $
6,750,422 $
2,095,373
Income taxes
$
$
RECONCILIATION TO AMOUNTS ON CONSOLIDATED BALANCE SHEETS:
Cash and cash equivalents 3,405,523 3,173,279
Restricted cash 10,770,608
TOTAL CASH, CASH EQUIVALENTS AND RESTRICTED CASH $
14,176,131 $
3,173,279
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Acquisition of property and equipment by decreasing prepayment for long-term assets $
(15,731,909)
$
Property and equipment acquired on credit as payable
$ 24,435,995
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SOURCE Pingtan Marine Enterprise Ltd.
