Pyxis Tankers Inc. (NASDAQ: PXS) reported Q4 EPS of ($0.17), $0.15 worse than the analyst estimate of ($0.02). Revenue for the quarter came in at $7.3 million versus the consensus estimate of $7.58 million.

Valentios Valentis, our Chairman and CEO commented:

“Our operating results for the three months ended December 31, 2019 reflected a better overall market compared to the same period in 2018. During the fourth quarter, 2019 charter rates for medium range tankers (“MRs”) continued to improve primarily as a result of seasonal demand and strong market fundamentals. We operated all of our MR’s on staggered time charters in order to obtain predictable cash flow, especially in light of the various uncertainties surrounding the impact of new 2020 IMO fuel regulations. In addition to normal seasonal demand for heating oil in the Northern Hemisphere, the improving rate environment was also a result of incremental cargoes for marine gasoil and new compliant low-sulphur fuel blends as well as a dramatically stronger crude tanker market which caused a number of larger product tankers to trade dirty cargoes thereby reducing available capacity to transport clean petroleum products, such as, diesel or jet fuel. We took advantage of this positive environment to sell the Pyxis Delta, our 2006 built non-eco tanker in order to achieve some of our strategic, operating and financial goals. The net proceeds were applied to de-lever our balance sheet, improve liquidity and better position us for growth. Further, we avoided operating this older, higher consuming vessel, which would be less competitive moving forward, and incurring the costs of a major upcoming special survey, which would have included the installation of the vessel’s ballast water treatment system.

Since early January 2020, the chartering environment has been very volatile. But, the overall impact of Covid-19 on the MR product tanker market has been limited so far. Initially, the spot market collapsed in the South East Asia region due to the dramatic decline in demand, the extended Lunar holidays in China and the ripple economic effects of the virus. However, spot rates have rebounded over the last couple of weeks. The Atlantic Basin spot market has held-up reasonably well despite a warm winter and the delayed arrival of Covid-19 in the Western Hemisphere, the impact of which is still to be determined. The period market has softened, which is usual for this time of the year, as refinery turn-arounds start to occur as well as fears of lower demand. Since the beginning of the year, the one-year time charter rate has declined by about $1,300/day for an Eco-MR to approximately $17,200/day.

Clearly, we are concerned about the health and welfare of all affected by the virus and we are hopeful that this will be a short-lived disruption. We continue to believe in a longer term, sustainable period of attractive charter rates as a result of improving product tanker fundamentals, such as, a relatively low newbuild orderbook for MRs combined with rebounding growth in consumption and increasing export-oriented petroleum refinery cargoes. In the short-term, silver-linings include lower bunker costs, tighter price spreads between high and low sulphur fuel oil, evolving arbitrage trading opportunities and lower net supply growth, primarily associated with delays in newbuild deliveries and drydockings, including scrubber installations. In this respect, we feel our mixed chartering strategy, modern eco fleet and stable operating cost structure will be beneficial during these uncertain times.”

For earnings history and earnings-related data on Pyxis Tankers Inc. (PXS) click here.