Pyxis Tankers Inc. — 2020 Form 20-F Summary
Business context and reporting period
Pyxis Tankers Inc. is a Marshall Islands holding company focused on owning and operating product tankers. The filing is an annual report for the fiscal year ended December 31, 2020, prepared under U.S. GAAP. The company operated five double-hull tankers at year-end after selling the six-vessel fleet’s oldest vessel, Pyxis Delta, in January 2020. Employment comprised a mix of spot and time charters.
Key financial and operating metrics
| Metric | 2020 | 2019 | Change |
|---|---|---|---|
| Net revenue | $21.711 million | $27.753 million | Down 21.8% |
| Net loss | $6.900 million | $8.330 million | Improved $1.430 million |
| Net loss attributable to common shareholders | $6.982 million | $8.330 million | Improved $1.348 million |
| Loss per common share | $0.32 | $0.39 | Improved |
| Operating loss | $1.935 million | $2.528 million | Improved $0.593 million |
| Net cash from operating activities | $(13.030) million | $5.661 million | Declined $18.691 million |
| Net cash from investing activities | $12.630 million | $(0.517) million | Improved, principally from vessel sale |
| Net cash used in financing activities | $(0.739) million | $(4.172) million | Lower use of cash |
| Cash and restricted cash | $4.037 million | $5.176 million | Down $1.139 million |
| Working capital | $(2.895) million | $(5.301) million | Deficit narrowed |
| Funded debt, net of deferred financing costs and promissory note | Approximately $58.6 million | Not clearly stated on the same basis | Debt remained material |
| Fleet utilization | 86.3% | 89.0% | Down 2.7 percentage points |
| Daily TCE rate | $11,456 | $11,756 | Down 2.6% |
| Daily vessel operating expense | $5,847 | $5,825 | Up 0.4% |
Spot-charter revenue declined to $7.022 million from $8.067 million, while time-charter revenue declined to $14.689 million from $19.686 million. Vessel operating expenses fell to $10.880 million, primarily because of the smaller fleet, and interest and finance costs declined to $4.964 million from $5.775 million.
Material changes versus the prior comparable period
- Pyxis Delta was sold on January 13, 2020 for approximately $13.2 million of net proceeds. Approximately $5.7 million was used to repay debt and approximately $7.5 million was used to repay related-party and trade liabilities.
- The average fleet size decreased from six vessels to five, reducing ownership days from 2,190 to 1,830 and operating days from 1,925 to 1,523.
- Three vessels underwent special surveys in 2020, increasing dry-dock days from 28 to 66 and contributing to lower available days and revenue.
- Revenue fell substantially, but the net loss improved because of lower fleet-related expenses, lower interest costs, and the absence of the $2.756 million 2019 loss on a vessel classified as held for sale.
- In October 2020, the company issued 200,000 Series A cumulative convertible preferred shares and warrants, generating approximately $4.3 million in net proceeds. The preferred shares carry a 7.75% annual dividend and are convertible at an initial price of $1.40 per common share.
- At December 31, 2020, the company had 21,962,881 common shares, 181,475 Series A preferred shares, and 1,735,040 warrants outstanding.
- The company remained in compliance with its debt covenants at year-end, but had no undrawn availability under existing loan agreements.
Guidance, outlook, commentary, risks and unusual items
Management did not provide formal numerical earnings or revenue guidance. It expects to fund near-term liquidity needs through vessel operations, the 2021 equity private placement, debt refinancing, potential asset sales, and possible additional debt or equity financing. Management stated that it expected to cover the next 12 months of liquidity needs and remain compliant with debt covenants based on those sources and its cash-flow projections.
- COVID-19 reduced demand for refined petroleum products, charter activity, utilization and charter rates, while increasing crew-rotation, dry-docking and operational costs. Management considers the duration and severity of the pandemic uncertain.
- Product tanker rates and vessel values are cyclical and volatile. The company faces exposure to spot-market rates, vessel off-hire, customer concentration and potential charterer defaults.
- Two customers represented approximately 74% of 2020 revenue, with one customer representing approximately 58%, creating material concentration risk.
- Liquidity is constrained by a $2.9 million working-capital deficit, $4.0 million of cash and restricted cash, substantial debt maturities and reliance on related-party support. Maritime had a $2.3 million receivable from the company at year-end, with no specific repayment terms.
- Debt included approximately $54.260 million of bank-loan principal and a $5.0 million related-party promissory note. Contractual principal payments were $3.410 million in 2021, $3.530 million in 2022, $35.970 million in 2023, $1.200 million in 2024 and $10.150 million in 2025 and thereafter.
- Most bank debt bears interest at LIBOR plus margins. The company disclosed sensitivity of approximately $0.5 million to a 100-basis-point interest-rate increase in 2020 and faces LIBOR-transition risk.
- The fleet was valued at approximately $79.8 million at December 31, 2020, down from $92.1 million at December 31, 2019. No vessel impairment charge was recorded in 2020, but impairment testing depends heavily on subjective future charter-rate assumptions.
- The company does not plan to install scrubbers and may incur higher compliant-fuel costs under IMO 2020. Ballast-water treatment systems were installed on Pyxis Malou and Pyxis Epsilon; additional regulatory capital expenditures remain possible.
- Environmental, greenhouse-gas, ballast-water, ship-recycling, cybersecurity, piracy, insurance and sanctions requirements may increase costs or restrict operations.
- Common-stock dividends are not expected in the near term. Series A preferred dividends are cumulative and payable monthly when declared.
- Subsequent events included a February 2021 private placement of 14,285,715 common shares for gross proceeds of $25.0 million, conversion of 58,814 preferred shares into 1,052,529 common shares, exercise of 144,500 warrants, and March 2021 refinancing of the $24.0 million Pyxis Epsilon loan with a new $17.0 million facility.
Important facts for investors to verify
- Verify the company’s post-filing liquidity, including the use of the $25.0 million private-placement proceeds and the cash required for the Epsilon refinancing.
- Verify 2021 debt maturities, balloon payments, minimum-liquidity requirements, security-cover ratios and compliance with all loan covenants.
- Monitor charter renewals, spot-market exposure, utilization, TCE rates and the proportion of revenue attributable to major customers.
- Assess dilution from preferred-share conversions, outstanding warrants, placement-agent warrants and future equity issuance.
- Review the ability to fund preferred dividends, debt service, dry-docking and ballast-water compliance without additional related-party financing or asset sales.
- Evaluate vessel valuations and impairment sensitivity to lower charter rates, higher operating costs and environmental-compliance expenditures.
- Review related-party management fees, advances, the $5.0 million promissory note and potential conflicts involving Maritime and company leadership.