Exhibit 99.1

 

 

 

pingtan marine enterprise Reports FINANCIAL RESULTS

 

for the first quarter ended march 31, 2019

 

Company to Hold Conference Call Friday, May 10, 2019, at 8:30 AM ET

 

FUZHOU, China, May 9, 2019 – 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 first quarter ended March 31, 2019.

  

First Quarter 2019 Financial Highlights (all results are compared to prior year period)

 

Revenue increased by 69.3% to $18.4 million from $10.9 million.

 

Gross profit decreased by 27.1% to $4.1 million from $5.6 million.

 

Net loss was $1.97 million, compared to net income of $0.98 million.

 

A non-recurring, non-cash impairment loss of $2.23 million was recorded due to the modification and rebuilding project of 7 vessels.

 

Net loss attributable to owners of the Company was $1.9 million, or $0.02 per basic and diluted share, compared to net income attributable to owners of the Company of $0.9 million, or $0.01 per basic and diluted share.

  

Management Comments

 

Mr. Xinrong Zhuo, Chairman and CEO of the Company, commented, “In the first quarter of 2019, we continued focusing on recovery of production capacity by deploying more fishing vessels to international waters for operation, which increased our harvest volume. In early March, the last batch of our first group of 27 modified and rebuilt fishing vessels have left the port of Fuzhou and sailed to the designated international waters for production; thus, all these fishing vessels are in operation. Also, during the first quarter of 2019, the Ministry of Agriculture and Rural Affairs approved the modification and rebuilding of another 24 of our fishing vessels, which indicates our second group of vessels to be modified and rebuilt. After the completion of the modification and rebuilding projects, these vessels will be allowed to operate in the international waters of the Indian Ocean, North Pacific Ocean, Southeast Pacific and Southwest Atlantic Oceans, including Argentina, which will further increase our production capacity and enrich our product mix.”

 

Factors Affecting Pingtan’s Results of Operations

 

As previously disclosed, 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. During the moratorium, the Company was informed that fishing licenses of four vessels operated through PT. Avona, one of the local companies through which Pingtan conducts business in Indonesia, and the fishery business license of PT. Dwikarya, the other local company through which Pingtan conducts business in Indonesia, were revoked. As a result of and because license renewal was prohibited due to the general moratorium, all local fishing licenses of the Company’s vessels in Indonesia are presently inactive.

 

Pingtan Marine Enterprise, Ltd.

May 9, 2019

  Page 2

 

In November 2015, the Indonesian government announced that the moratorium had concluded. However, the MMAF has not implemented new fishing policies and resumed the license renewal process, and the Company does not know when exactly licensing and renewal will resume. Since the Company previously derived a majority of its revenue from this area, this ban has caused a significant drop in production and our financial results continue to be adversely affected.

 

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 alleged and investigated whether false statements were made by the Company during the licensing process and the vessels were simultaneously registered in Indonesia.  The Company disputed these allegations and the government of Timor-Leste eventually agreed to release these vessels as no evidence was presented to support such allegations. The 13 vessels have returned to China for regular maintenance.

 

As of March 31, 2019, among the Company’s 141 vessels, 12 are located in the Bay of Bengal in India; 37 are located in international waters; 13 have returned to China from the Democratic Republic of Timor-Leste due to the reason described above; 2 transport vessels are in the modification and rebuilding project; 24 vessels are in preparation for modification and rebuilding; 6 vessels are deregistered and is undergoing the application procedures for modification and rebuilding; the remaining 47 vessels were licensed by the MOA to operate in the Arafura Sea in Indonesia and 3 of them returned to China for maintenance in the first quarter of 2019. The 44 vessels in Indonesian waters, however, are not in operation because the licenses are currently inactive due to either the moratorium discussed above, the revocation of the fishery business license of the local entity through which the vessels operate, or, with respect to 4 vessels, the revocation of the local fishing licenses.

 

First Quarter 2019 Selected Financial Highlights

 

($ in millions, except shares and per share)   Three Months ended
March 31,
 
   2019   2018 
         
Revenue  $18.4   $10.9 
Cost of Revenue  $14.3   $5.3 
Gross Profit  $4.1   $5.6 
Gross Margin   22.1%   51.5%
Net (Loss) Income  $(1.97)  $0.98 
Basic and Diluted Weighted Average Shares   79.1    79.1 
EPS (in $)  $(0.02)  $0.01 

  

Balance Sheet Highlights 

 

($ in millions, except for book value per share)  3/31/2019   12/31/2018 
         
Cash and Cash Equivalents  $76.9   $2.0 
Total Current Assets  $99.3   $15.5 
Total Assets  $333.4   $247.0 
Total Current Liabilities  $88.3   $73.1 
Total Long-term Debt, net of current portion  $92.6   $22.3 
Total Liabilities  $180.9   $95.4 
Shareholders’ Equity  $152.5   $151.6 
Total Liabilities and Shareholders’ Equity  $333.4   $247.0 
Book Value Per Share (in $)  $1.93   $1.92 

  

Pingtan Marine Enterprise, Ltd.

May 9, 2019

  Page 3

 

Consolidated Financial and Operating Review

 

Revenue

 

Revenue for the three months ended March 31, 2019 was $18.4 million, an increase of $7.5 million, or 69.3%, from $10.9 million for the same period in 2018. The increase was mainly attributable to significant increase in both harvest volume and sales volume due to more fishing vessels operating in international waters. Sales volume increased by 123% to 8.7 million KG in the three months ended March 31, 2019 from 3.9 million KG in the same period of 2018. Average unit sale price decreased by 24% in the three months ended March 31, 2019, as compared to the three months ended March 31, 2018, which was primarily due to the different sales mix.

  

Gross Margin

 

The Company’s gross margin was 22.1% for the three months ended March 31, 2019, compared to 51.5% in the prior year period. As new fishing vessels are deployed in different waters of high seas, a different catch mix led to a drop of average unit sale price by 24%, and more importantly, 8 of our first group of 27 modified and rebuilt fishing vessels set their sail towards the designated waters by the end of the first quarter 2019, driving up the refueling cost and other related costs of revenue while no revenue was generated because the vessels were not yet in operation in the reporting period, which primarily accounted for the decrease in gross margin.

  

Selling Expenses

 

For the three months ended March 31, 2019, selling expenses was $0.7 million compared to $0.5 million in the prior year period. The increase was primarily due to the increase in insurance due to the different insured fishing vessel mix, the increase in storage fees and shipping and handling fees as a result of larger warehouses rented and an increased number of deliveries to warehouse, partially offset by the decrease in customs clearance charge and other miscellaneous selling expense.

  

General & Administrative Expenses

 

For the three months ended March 31, 2019, general and administrative expenses for the fishing business was $4.8 million, compared to $3.1 million in the prior year period. The increase was primarily due to impairment loss on the vessels for the three months ended March 31, 2019, as well as the increase in professional fees, rent and related administrative service charge and travel and entertainment expenses. The increase was partially offset by the decrease in depreciation in relation to non-operating vessels and in compensation and related benefits and no bad debt expense recorded as compared to $0.17 million for the three months ended March 31, 2018.

 

Pingtan Marine Enterprise, Ltd.

May 9, 2019

  Page 4

 

For the three months ended March 31, 2019, the Company dismantled 1 transport vessel and deregistered 6 fishing vessels and applied to the MOA for building 7 new vessels. Due to the modification and rebuilding projects of the 7 vessels, the Company recorded a non-recurring non-cash impairment loss on the carrying value of the 7 vessels of $2,229,502 and the future cash flow provided by sale or disposal of the 7 vessels will be recorded as other income.

 

Net (Loss) Income

 

Net loss for the three months ended March 31, 2019 was $1.97 million, compared to net income of $0.98 million in the same period of 2018. Due to the modification and rebuilding of 7 vessels, the Company recorded a non-recurring, non-cash impairment loss of $2.23 million.

 

Net (Loss) Income Attributable to Owners of the Company

 

Net loss attributable to owners of the Company for the three months ended March 31, 2019 was $1.9 million, or $0.02 per basic and diluted share, compared to net income attributable to owners of the Company of $0.9 million, or $0.01 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 Friday, May 10, 2019 – 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/30379/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.

 

Pingtan Marine Enterprise, Ltd.

May 9, 2019

  Page 5

 

 

Business Risks and Forward-Looking Statements

 

This press release may contain forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a safe harbor under the Securities Act of 1933 and the Securities Exchange Act of 1934 for forward-looking statements. 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; 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:

 

Roy Yu

Chief Financial Officer

Pingtan Marine Enterprise Ltd.

Tel: +86 591 87271753

ryu@ptmarine.net

 

Maggie Li 
Investor Relations 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 5661 7012 

kyao@equityny.com

 

Pingtan Marine Enterprise, Ltd.

May 9, 2019

  Page 6

 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(IN U.S. DOLLARS) 

 

   For the Three Months Ended
March 31,
 
   2019   2018 
         
REVENUE  $18,424,209   $10,884,268 
           
COST OF REVENUE   14,343,558    5,283,716 
           
GROSS PROFIT   4,080,651    5,600,552 
           
OPERATING EXPENSES:          
Selling   709,929    481,451 
General and administrative   3,595,390    1,559,597 
General and administrative - depreciation   1,222,161    1,566,019 
Grant income   -    (1,052,112)
Loss on fixed assets disposal   -    2,181,455 
           
Total Operating Expenses   5,527,480    4,736,410 
           
(LOSS) PROFIT FROM OPERATIONS   (1,446,829)   864,142 
           
OTHER INCOME (EXPENSE):          
Interest income   2,516    19,764 
Interest expense   (529,165)   (462,259)
Foreign currency transaction gain   90,084    573,992 
Loss on equity method investment   (110,616)   (10,951)
Other income   25,671    - 
           
Total Other (Expense) Income, net   (521,510)   120,546 
           
(LOSS) INCOME BEFORE INCOME TAXES   (1,968,339)   984,688 
           
INCOME TAXES   -    - 
           
NET (LOSS) INCOME  $(1,968,339)  $984,688 
           
LESS: NET (LOSS) INCOME ATTRIBUTABLE TO THE NON-CONTROLLING INTEREST   (81,100)   112,395 
           
NET (LOSS) INCOME ATTRIBUTABLE TO OWNERS OF THE COMPANY  $(1,887,239)  $872,293 
           
COMPREHENSIVE (LOSS) INCOME:          
NET (LOSS) INCOME   (1,968,339)   984,688 
OTHER COMPREHENSIVE GAIN          
Unrealized foreign currency translation gain   2,899,349    5,603,908 
COMPREHENSIVE INCOME  $931,010   $6,588,596 
LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO THE NON-CONTROLLING INTEREST   124,977    560,609 
COMPREHENSIVE INCOME ATTRIBUTABLE TO OWNERS OF THE COMPANY  $806,033   $6,027,987 
           
NET (LOSS) INCOME PER ORDINARY SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY          
Basic and diluted  $(0.02)  $0.01 
           
WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING:          
Basic and diluted   79,055,053    79,055,053 

 

Pingtan Marine Enterprise, Ltd.

May 9, 2019

  Page 7

 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(IN U.S. DOLLARS)

 

   March 31,   December 31, 
   2019   2018 
   (Unaudited)     
ASSETS        
CURRENT ASSETS:          
Cash  $76,893,321   $1,966,855 
Accounts receivable, net of allowance for doubtful accounts   7,245,164    6,307,492 
Inventories, net of reserve for inventories   10,246,664    5,840,207 
Prepaid expenses   452,875    644,824 
Other receivables   4,483,481    698,450 
           
Total Current Assets   99,321,505    15,457,828 
           
OTHER ASSETS:          
Cost method investment   3,118,735    3,059,797 
Equity method investment   29,317,825    28,872,521 
Right-of-use asset   690,793    - 
Property, plant and equipment, net   200,950,673    199,571,425 
           
Total Other Assets   234,078,026    231,503,743 
           
Total Assets  $333,399,531   $246,961,571 
LIABILITIES AND SHAREHOLDERS’ EQUITY          
           
CURRENT LIABILITIES:          
Accounts payable  $20,895,978   $30,642,125 
Accounts payable - related parties   2,988,073    3,244,843 
Short-term bank loans   5,169,335    5,085,139 
Long-term bank loans - current portion   21,088,587    8,487,295 
Accrued liabilities and other payables   7,224,298    6,058,548 
Lease liability   690,750    - 
Due to related parties   30,292,800    19,555,277 
           
Total Current Liabilities   88,349,821    73,073,227 
           
OTHER LIABILITIES:          
Long-term bank loans - non-current portion   92,559,590    22,329,234 
           
Total Liabilities   180,909,411    95,402,461 
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 March 31, 2019 and December 31, 2018)   79,055    79,055 
Additional paid-in capital   81,682,599    81,682,599 
Retained earnings   47,705,830    49,593,069 
Statutory reserve   14,760,112    14,760,112 
Accumulated other comprehensive loss   (10,754,775)   (13,448,047)
Total equity attributable to owners of the company   133,472,821    132,666,788 
Non-controlling interest   19,017,299    18,892,322 
           
Total Shareholders’ Equity   152,490,120    151,559,110 
           
Total Liabilities and Shareholders’ Equity  $333,399,531   $246,961,571 

 

Pingtan Marine Enterprise, Ltd.

May 9, 2019

  Page 8

 

PINGTAN MARINE ENTERPRISE LTD. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN U.S. DOLLARS)

 

   For the Three Months Ended
March 31,
 
   2019   2018 
         
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net (loss) income  $(1,968,339)   $984,688 
Adjustments to reconcile net income from operations to net cash provided by operating activities:          
Depreciation   2,740,118    2,433,126 
Increase in allowance for doubtful accounts   -    168,945 
Decrease in reserve for inventories   213,454    64,468 
Loss on equity method investment   110,616    10,951 
Loss on disposal of fixed assets   -    2,181,455 
Impairment loss of fishing vessels   2,229,502    - 
Changes in operating assets and liabilities:          
Accounts receivable   (814,569)   206,838 
Inventories   (4,498,954)   (1,795,329)
Prepaid expenses   391,018    113,507 
Other receivables   592,037    (125,770)
Accounts payable   5,444,714    3,008,880 
Accounts payable - related parties   (318,642)   (595,916)
Advance from customers   96,342    - 
Accrued liabilities and other payables   950,819    (1,200,760)
Accrued liabilities and other payables - related party   (1,290)   (38,208)
Due to related parties   5,223,359    (497,164)
           
NET CASH PROVIDED BY OPERATING ACTIVITIES   10,390,185    4,919,711 
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Purchase of property, plant and equipment   (21,353,232)   - 
Payments made for acquisition of fishing vessels from related party   2,159,246    - 
Deposit for purchase of land use right   (4,357,621)   - 
           
NET CASH USED IN INVESTING ACTIVITIES   (23,551,607)   - 
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Repayments of short-term bank loans   -    (5,000,000)
Proceeds from long-term bank loans   83,002,312    - 
Repayments of long-term bank loans   (926,365)   - 
Advances from related parties   5,534,231    1,847,136 
Payments made for dividend   -    (790,551)
           
NET CASH PROVIDED (USED IN) BY FINANCING ACTIVITIES   87,610,178    (3,943,415)
           
EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS   477,710    (204,936)
           
NET CHANGE IN CASH AND CASH EQUIVALENTS   74,926,466    771,360 
           
CASH AND CASH EQUIVALENTS - beginning of period   1,966,855    3,826,727 
           
CASH AND CASH EQUIVALENTS - end of period  $76,893,321   $4,598,087 
           
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:          
Cash paid for:          
Interest  $1,286,302   $424,054 
Income taxes  $-   $- 
           
RECONCILIATION TO AMOUNTS ON CONSOLIDATED BALANCE SHEETS:          
Cash and cash equivalents   76,893,321    3,818,837 
Restricted cash   -    779,250 
TOTAL CASH, CASH EQUIVALENTS AND RESTRICTED CASH  $76,893,321   $4,598,087 
           
NON-CASH INVESTING AND FINANCING ACTIVITIES:          
Property and equipment acquired on credit as payable  $10,111,168   $-