PETROGRESS, INC. Key Financial Results
Third Quarter of 2021 compared to the Third Quarter of 2020
Earnings by product sales Nine months ended September 30, Net sales volumes per product 2021 2020 Crude Oil Sales$ 620,000 $ 749,200 Gas Oil Sales 870,000 622,000 Lubricants Sales 58,750 143,501 Hires & Freights Sales 555,000 993,483 Other Revenues / Discounts 215,368 46,778 Totals$ 2,319,118 $ 2,554,962
Refer to the "Results of Operations" section beginning on page 14 for a discussion of our financial results.
Executive Overview
The company maintain its principal marketing and operating offices at 1, Akti
Xaveriou, 18538 Piraeus,
Business Environment and Outlook
Earnings of the company depend mostly on the profitability of its crude oil business segment. The most significant factor affecting the results of operations is the price of crude oil, which is determined in global markets outside of the company's control. The price of crude oil has fallen significantly since mid-year 2020. The downturn in the price of crude oil has impacted the company's results of operations, cash flows, leverage, capital and exploratory investment program and production outlook. A sustained lower price environment could result in the impairment or write-off of specific assets in future periods. Similarly, impairments or write-offs have occurred, and may occur in the future, as a result of managerial decisions not to progress certain projects in the company's portfolio. We have reacted to the downturn by effecting reductions in operating expenses, pacing and re-focusing of capital and exploratory expenditures. Our lack of cash liquidity remains on low levels for the rest of the year and undoubtedly shall continue affecting our operations and cash flow. However, management believes that significant opportunities exist today and will develop further in the future, to leverage the Company's expertise, financial strength and business model in energy markets around the world.
Response to Market Conditions and COVID-19 During the pandemic period the travel restrictions and other constraints on economic activity were implemented in many locations around the world to limit the spread of the COVID-19 virus. Lower commodity prices negatively impacted the company's first quarter 2021 financial and operating results. While demand and commodity prices have shown signs of recovery, they are not back to pre-pandemic levels, and financial results will likely continue to be challenged in future quarters. Due to the rapidly changing of environment, there continues to be uncertainty and unpredictability around the extent to which the COVID-19 pandemic will impact our results, which could be material.
Refer to the "Cautionary Statements Relevant to Forward-Looking Information" on Page 2 and to "Risk Factors" in Part II, Item 1A, on page 17 for a discussion of some of the inherent risks that could materially impact the company's results of operations or financial condition.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
Operating sectors
Our business operates in the downstream and midstream sectors of the energy industry, where we acquire and supply crude oil, and engage in the refining and marketing of refined products and lubricants. As a supplier, we procure crude oil from our direct sources and deliver by our tankers fleet to buyers' destinations. We provide our customers with services that require sophisticated logistical operations designed to meet their strict oil quality and delivery scheduling needs. Throughout our history, we have expanded our business capabilities through strategic alliances, select business and vessel acquisitions, and the establishment of new service centers.
Other Businesses
Effected as on
Our key business segments
The following are descriptions of our recent initiatives undertaken in each of our key business segments:
Downstream; Earnings for the upstream segment are closely aligned with industry
prices for crude oil. Crude oil prices are subject to external factors over
which the company has no control, including product demand connected with global
economic conditions, industry production and inventory levels, technology
advancements, production quotas or other actions imposed by the
Midstream; The outbreak of COVID-19 pandemic occurred the ceased of our entire fleet operations and employments which resulted the complete elimination of freight and hire incomes, while the fleet expenses remained on the same levels during the third quarter 2021. Nevertheless, we believe the shipping industry will be rectified and return to the normal levels, therefore we still seek to expand our midstream operations in other international ocean routes by adding to our fleet larger and younger tanker vessels. We are monitoring the vessel market for opportunities while we are also working to secure the necessary funding for expansion. Our business strategy is based in part upon the expansion of our business to new, or within existing, markets. In order to expand our operations, we will be required to use cash from operations, incur borrowings or raise capital through the sale of debt or equity securities in the public or private markets.
Strategic Alliances. We are dedicated to rapid growth through acquisitions, partnerships and agreements that will enable us to enter and expand into new markets. Our strategy in pursuing these alliances is based on the target's ability to generate positive cash flow, effectively meet customer needs, and supply desirable products, services, among other considerations.
Results of Operations
The following section presents the results of operations and variances on a before-tax basis for the company's business operations, as well as for "All Other." Our operating revenues are driven primarily of the commodities trading sales and our tankers fleet employment days during which our vessels are generating revenues while our financial results are subject to a number of sectors and reflects to the following factors:
Cost of commodities; is the cost we purchase the oil products -mainly the crude oil- and such cost is based either on Brent Index prices or Fixed price, the quality and quantity of the product.
Commodities Operating Expenses; relates to products surveys before and after the shipment, bunkers supplied to the employment vessel, agency and representative services.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
Shipping & Logistic Expenses; includes the sea freight and mobilization cost, the performed loading and discharging of the product, and any expenses occurred during the shipping time from the loading point up to unloading facilities.
Vessels Operating Expenses; includes crew wages and bonuses, their medical support and travelling, maintenance and repairs to the vessels hull and their machineries, expenses for supplies of spare-parts and consumable stores, paints, lubricants, fresh water, bunkers, agency services, etc.
General and Administrative Expenses; relates to our directors, officers and
managers salaries and compensations, shore staff wages, employee's federal
insurance, offices lease and utilities, telecommunications, travelling and
representations of our officers, our agency fees we pay to our branch's offices
in
Corporate Expenses; are all company's expenses and includes, our executive's compensations, attorney's fee, Auditors and accountant fees, Consultant's and P/R fees, Transfer agents of our stock, and miscellaneous.
Other factors may affect our Results of Operations; In addition to the said
expenses there are factors beyond of our control which may affect seriously our
operations results. Inasmuch as we trade also
EBITDA and Adjustment; EBITDA represents net income before expenses, taxes and depreciation. Adjusted EBITDA represents net income before expense, taxes, taxes, depreciation and amortization of dry-docking.
Nine months ended
September 30,
2021 2020
Operating Earnings / (losses)
Operating Earnings/(losses) of during the third quarter of 2021 amount to
Consolidated Statement of Income; Sales of products provided in the below table:
Nine months Ended
September 30,
Net sales volumes per product 2021 2020
Crude Oil Sales $ 620,000 $ 749,200
Gas Oil Sales 870,000 622,000
Lubricants Sales 58,750 143,501
Hires & Freights Sales 555,000 993,483
Other Revenues/Discounts 215,368 46,778
Totals $ 2,319,118 $ 2,554,962 Cost of Goods Sold provided in the below table:
Nine months Ended
September 30,
Cost of goods sold 2021 2020
Crude Oil purchased costs
-
Totals $ (1,947,200 ) $ (1,899,000 ) ? Sales: Total operating sales for the nine months ended
2020, were
approximately 9%.
? Cost of goods sold: For the nine months ended
of goods sold was
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Management's Discussion and Analysis of Financial Condition and Results of Operations
? Corporate expenses: Corporate expenses mainly include the expenses incurred by
2021 and 2020 were
or approximately 47%.
? General and administrative expenses: For the nine months ended
2021, General and administrative expenses decreased to
? Net income / (loss) attributable PGI: For the nine months ended
2021, the Company had a net loss of
? EBITDA: For the nine months ended
2020.
Nine months Ended
Consolidated results of Operation (after eliminations) September 30,
2021 2020
Total Operating Revenues $ 2,319,118 $ 2,554,962 Total Inventories (Bunkers - Lubricants & Spare parts) 270,733 1,424,436 Total Operating Expenses & Cost of Goods Sold*
$ (5,258,709 ) $ (6,151,184 ) * Operating expenses includes, corporate expenses, shipping & logistic, commodities purchase cost, fleet expenses, General and Administrative expenses, and Depreciation expense;
Summarized Financial Data - Subsidiaries
The management and operation of our business is performed directly and
independently by each subsidiary. Assets, inventories, partnership interests,
joint venture interests and contracts are held by the subsidiaries.
Petrogress Int'l LLC. (PIL)
Summarized financial information is presented in the following table:
Nine months Ended
September 30
2021 2020
Sales and other operating revenues $ 1,548,750 $ 1,514,701
Inventory (Crude oil & Lubricants) 231,365 699,397
Cost and other expenses (3,069,441 ) (6,151,184 )
Net income / (loss) attributable to
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* 100% Net income / (loss) attributable to
Petronav Carriers LLC . (PCL)
Summarized financial information is presented in the following table:
Nine months Ended
September 30
2021 2020
Sales and other operating revenues $ 770,368 $ 1,040,261
Inventory (Bunkers - Lubricants & Spare Parts) 39,369 146,298
Cost and other expenses (1,340,518 ) (2,512,025 )
Net income / (loss) attributable to
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* 100% Net income / (loss) attributable to
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Management's Discussion and Analysis of Financial Condition and Results of Operations
Petrogress, Inc. (PGI) The following table presents the results of equity interest PGI has into the subsidiaries: Nine months Ended September 30 2021 2020 Sales and other operating revenues $ - $ - Corporate, Administrative and other expenses (278,917 ) (437,791 )
Net income / (loss) attributable to
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Net income / (loss) attributable from ownership interest of the subsidiaries.
Liquidity & Capital Resources
Our main sources of liquidity are cash and cash equivalents, accounts receivable
and internally generated cash flow from operations. At
For the nine months ended
The company's future debt level is dependent primarily on results of operations,
cash that may be generated from asset dispositions, the capital program, lending
commitments to affiliates, and shareholder contributions. Our need for capital
resources is driven by our expansion plans, ongoing maintenance and improvement
of our vessels, support of our operational expenses, corporate overhead and the
expenses we suffer in order to comply with the regulatory requirements of
Cash and Cash Equivalents; The following table presents sources and use of cash
and cash equivalents:
Nine months Ended September 30,
Sources of cash and cash equivalents 2021 2020
Operating activities $ (260,896 ) $ 794,469
Borrowing - -
Others - (932,824 )
Total sources of cash and cash equivalents
Management seeks to secure the necessary financing for the expansion of Company's operations. The company needs to raise a reasonable finance in order to expand its operations, increase the oil sales and support its projects of the gas-stations
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