Pingtan Marine Enterprise Reports Financial Results for the Third Quarter and Nine Months Ended September 30, 2021

FUZHOU, China, Nov. 17, 2021 /PRNewswire/ -- Pingtan Marine Enterprise Ltd. (Nasdaq: PME) ("Pingtan" or the "Company"), a fishing company based in the People's Republic of China (PRC), today announced financial results for its third quarter and nine months ended September 30,2021.

Third Quarter 2021 Financial Highlights (Year-on-Year Comparisons)

• Revenue was $36.1 million, increased by 133.7%from$15.4 million.
  
  
• Gross loss was $4.1 million compared to gross profit of $1.7million.
  
  
• Net income was $2.9 million, compared to net income of $0.8 million.
  
  
• Net income attributable to ordinary shareholders of the Company was $2.6 million, or $0.03per basic and diluted share, compared to net income attributable to ordinary shareholders of the Company of $0.7 million, or $0.01 per basic and diluted share. 

Management Comments

Mr. Xinrong Zhuo, Chairman and CEO of the Company, commented, "We are glad to report an over 130% increase in revenue and an over 110% increase in sales volume for the third quarter of 2021.However, with the number of global COVID-19 cases surpassing 250 million as of today, the recent COVID-19 outbreak in many regions of China had certain impact on Pingtan and the Company was faced with a situation of a growth in revenue and sales volume but a decline in gross margin. Although we remain on the sidelines of the follow-up market situation in 2021, we are confident in the sustainable development of China's fishery industry. We believe that for companies like Pingtan that focuses on pelagic fishery development, our advantages will become more apparent as the market gradually recovers."

Factors Affecting Pingtan's Results of Operations

COVID-19 pandemic

In December 2019, a novel strain of coronavirus (COVID-19) surfaced in the PRC. In reaction to this outbreak, many provinces and municipalities in the PRC activated the highest Level-I Response to the emergency public health incident. As a result, business activities in the PRC were significantly affected.

Emergency quarantine measures and travel restrictions have had a significant impact on many sectors across the PRC, which has also adversely affected the Company's operations. To reduce the impact on production and operation, the Company implemented certain safety measures to allow us to gradually resume work in mid-February. For the employees who left Fuzhou during the Spring Festival holiday and could not return to Fuzhou as scheduled, or those who could only resume work after satisfying the 14-day quarantine requirement, the Company provided paid leave. Since resuming work in mid-February, the Company have been using a shift system and adopted additional health and safety procedures to protect its employees. With these measures, the Company was able to maintain sales and operations from mid-February to mid-March. On March 23, 2020, the Company resumed normal operations and is conducting business as usual with health and safety procedures to protect employees. Management is focused on mitigating the effects of COVID-19 on its business operations while protecting the employees' health and safety. 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 are in the best interests of its employees, customers, partners, suppliers and other stakeholders.

Some of the Company's customers are fish processing plants that export processed fish products to foreign countries. These customers reduced or postponed their purchases from the Company in the initial stage of the pandemic, but since the middle of the second quarter of 2020, they have adjusted their business strategies in relation to exportation or domestic sale. Because of the reduction or postponement, the Company's unit selling price decreased, its inventory levels increased, and accounts receivables were not timely paid as anticipated.

The COVID-19 pandemic continues to cause major disruptions to businesses and markets worldwide as the virus spreads or a resurgence in certain jurisdictions. The effects of the outbreak are still evolving, and the ultimate severity and duration of the pandemic and the implications on global economic conditions remains uncertain. Therefore, the extent of the impact of the pandemic on its 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 the Company's 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 the PRC, United States, or globally.

While the Company anticipates its results of operations will continue to be impacted by this pandemic for the remainder of the year, the Company 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 September 30, 2021, of the Company's 142vessels, 100 were located in international waters, 12 were located in the Bay of Bengal in India, 13 were located in the PRC and17 were located in the Arafura Sea in Indonesia and not in operation. The Company has another 1 krill fishing vessel located in the shipbuilding factory in China that was suspended for construction and the Company has initiated negotiations with the shipbuilding company for the purpose of terminating the vessel construction contract.

Third Quarter 2021Selected Financial Highlights

Balance Sheet Highlights 

Consolidated Financial and Operating Review

Revenue& Sales volume

Revenue for the three months ended September30, 2021was $36.1million, an increase of $20,655,591, or133.7%, from $15.4million for the same period in 2020. Sales volume increased by 110.1% to30.9 million KG in the three months ended September 30, 2021from 14.7 million KG in the same period of 2020.Average unit sale price increased 11.4% in the three months ended September30, 2021as compared to the three months ended September 30, 2020.

For the nine months ended September 30, 2021, the Company's revenues were $101.3 million compared to $56.2 million in the nine months of 2020, an increase of $45,057,751, or 80.1%. Sales volumes increased by 43.7% to 71.8 million KG in the nine months ended September 30, 2020, from 50 million KG in the same period of 2020. Average unit sale price increased25.9% in the nine months ended September 30, 2021as compared to the nine months ended September 30, 2020.

For the three and nine months ended September 30, 2021, the increase in revenue was primarily attributable to the different sales mix, average unit sale price increased, and increase in sales volume as more vessels were in operation.

Gross Margin

The Company's gross margin was (11.3) % for the three months ended September 30, 2021, compared to gross margin of 10.7% in the prior year period.  The decrease was due to the increase in unit production cost of fish. 

For the nine months ended September 30, 2021, gross margin was (5.2) %, compared to gross margin of 17.0% in the same period of 2020. The decrease in gross margin for the nine months ended September 30, 2021 was primarily due to more vessels were put into operation, which drove up refueling costs and other related costs of revenue, and the purchase cost of fishery products. 

Selling Expenses

For the three months ended September 30, 2021, selling expenses were $2.0 million compared to $1.3 million in the prior year period. The increase was primarily due to the increase in insurance, storage fees and customs clearance charge, shipping and handling fees, adverting and other miscellaneous selling expense.

For the nine months ended September 30, 2021, selling expenses were $5.1million compared to $3.3million in the same period of 2020. The increase was due to the increase in insurance, storage fees and customs clearance charge, and adverting, partially offset by the decrease in Shipping and handling fees and other miscellaneous selling expense.

General & Administrative Expenses

For the three months ended September 30, 2021, general and administrative expenses were $2.2 million, compared to $1.6 million in the prior year period.   The increase was mainly due to the increase in depreciation, professional fees and rent and related administrative service charge.

For the nine months ended September 30, 2021, general and administrative expenses were $6.1 million, compared to $5.2 million in the prior year period. The increase was mainly due to increase in professional fees, bad debt expense, travel and entertainment and other general and administrative expenses, partially offset by the decrease in depreciation.

Net Income (Loss)

Net Income for the three months ended September 30, 2021 was $2.9million, compared to net income of $0.8 million in the same period of 2020.

Net loss for the nine months ended September 30, 2021 was $9.7 million, compared to net income of $7.5 million in the same period of 2020.

Net Income (Loss) Attributable to Ordinary Shareholders of the Company

Net income attributable to ordinary shareholders of the Company for the three months ended September 30, 2021 was $2.6 million, or $0.03 per basic and diluted share, compared to net income attributable to owners of the Company of $0.7million, or $0.01 per basic and diluted share, in the same period of 2020.

Net loss attributable to ordinary shareholders of the Company for the nine months ended September 30, 2021 was $9.5 million, or $(0.11) per basic and diluted share, compared to net income attributable to owners of the Company of $6.8 million, or $0.09per basic and diluted share, in the same period of 2020.

About Pingtan

Pingtan is a 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; 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

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