EX-99.1 2 q32023earningspressrelease.htm EX-99.1 EARNINGS RELEASE Document

Pangaea Logistics Solutions Ltd. Reports Financial Results for the Quarter Ended September 30, 2023
NEWPORT, RI - November 8, 2023 - Pangaea Logistics Solutions Ltd. (“Pangaea” or the “Company”) (Nasdaq: PANL), a global provider of comprehensive maritime logistics solutions, announced today its results for the three months ended September 30, 2023.
THIRD QUARTER 2023 RESULTS

•Net income attributable to Pangaea of $18.9 million, or $0.42 per diluted share
•Adjusted net income attributable to Pangaea of $14.4 million, or $0.32 per diluted share
•Operating cash flow of $16.3 million
•Adjusted EBITDA of $27.9 million
•Time Charter Equivalent ("TCE") rates earned by Pangaea of $15,748 per day
•Pangaea’s TCE rates exceeded the average Baltic Panamax and Supramax indices by 49%
•Ratio of net debt to trailing twelve-month Adjusted EBITDA of 2.2x
•Announced the sale of the Bulk Trident for $9.8 million in October 2023

For the third quarter ended September 30, 2023, Pangaea reported non-GAAP adjusted net income of $14.4 million, or $0.32 per diluted share, on total revenue of $135.6 million. Third quarter TCE rates declined 35% on a year-over-year basis, while total shipping days, which include both voyage and time charter days, declined 1% to 4,610 days, when compared to the year-ago period.

The TCE earned was $15,748 per day for the three months ended September 30, 2023, compared to an average of $24,107 per day for the same period in 2022. During the third quarter 2023, the Company’s average TCE rate exceeded the benchmark average Baltic Panamax and Supramax indices by 49%, supported by Pangaea’s long-term contracts of affreightment ("COAs"), specialized fleet, and cargo-focused strategy.

Total Adjusted EBITDA margin remained consistent when compared to the year-ago period, despite a decrease in revenue.

As of September 30, 2023, the Company had $87.4 million in cash and equivalents. Total debt, including lease finance obligations was $279.3 million. At the end of the third quarter 2023, the Company's net debt to trailing twelve-month adjusted EBITDA was at 2.2x. During the three months ended September 30, 2023, the Company repaid $3.3 million of long-term debt, $4.1 million of finance leases, and paid $4.5 million of cash dividends.

As of November 7, 2023 the Company has performed and booked approximately 2,715 total shipping days generating a TCE of $19,000 per day for the fourth quarter.

The Company's Board of Directors declared a quarterly cash dividend of $0.10 per common share, to be paid on December 15, 2023, to all shareholders of record as of December 1, 2023.

MANAGEMENT COMMENTARY

“Our strong third quarter results demonstrate the durability and flexibility of our business model during a period of broader market volatility,” stated Mark Filanowski, Chief Executive Officer of Pangaea Logistics Solutions. “Our entire ice class 1A fleet was fully utilized under long-term contracts during the third quarter, resulting in a realized TCE rate that was nearly 50% above prevailing market indices. Our other contract positions and our strategic focus on commercial growth across new and existing trades, together with a continued focus on disciplined expense management, positioned us to produce good margin realization, Adjusted EBITDA and free cash flow in a low market environment.”

“We remain committed to a balanced capital allocation strategy, one that prioritizes debt reduction, organic investments, the opportunistic acquisition of complementary assets and a stable quarterly cash dividend,” continued Filanowski. “On a trailing twelve-month basis, we’ve generated more than $62 million in operating cash flow while reducing our total outstanding debt by more than $23 million. Additionally, we have invested approximately $50 million in acquiring new vessels and logistics assets, and have returned more than $18 million to our shareholders through cash dividends, consistent with our mandate to maximize shareholder value. Pangaea also continues to prioritize its multi-year fleet renewal program, as we divest of older vessels while investing in newer, more efficient vessels. To that end, we announced the sale of the 2006-built Bulk Trident for nearly $10 million in October 2023. In 2024, we’ll seek to reinvest in one or more newer vessels as we manage a growing fleet of young, high quality vessels.

“The bulk shipping market continues its volatile path,” concluded Filanowski. We believe our premium rate model and long-term COAs position us to execute on our strategy, while continue to drive shareholder returns.”



STRATEGIC UPDATE

Pangaea remains committed to developing a leading dry bulk logistics and transportation services company of scale, providing its customers with specialized shipping and supply chain and logistics offerings in commodity and niche markets, which drive premium returns measured in time charter equivalent per day.

Leverage integrated shipping and logistics model. In addition to operating the largest high ice class dry bulk fleet of Panamax and post-Panamax vessels globally, Pangaea also performs stevedoring services, together with port and terminal operations capabilities. Following the acquisition of marine port terminal operations in Port Everglades/Ft. Lauderdale, Port of Palm Beach, Florida, and Port of Baltimore, Maryland in June 2023, the company has been actively working to expand its onshore relationships with new and existing customers.

Continue to drive strong fleet utilization. In the third quarter, Pangaea's 25 owned vessels were fully utilized and supplemented with an average of 26 chartered-in vessels to support cargo and COA commitments. Given the seasonal demand in artic trade routes, the Company utilized chartered-in vessels to support it’s non-artic trade routes. Going forward, the Company will continue to target an average fleet of 20 chartered-in vessels in order to maximize returns amid a period of more muted market pricing.

Continue to drive fleet upgrades and renewals. In October 2023, the Company announced its intent to sell the 2006-built Supramax Bulk Trident for $9.8 million. Looking ahead, the Company intends to opportunistically manage its fleet with the purpose of maximizing TCE rates, while continuing to support client requirements on an on-demand basis.

THIRD QUARTER 2023 CONFERENCE CALL

The Company’s management team will host a conference call to discuss the Company’s financial results on Thursday, November 9, 2023 at 8:00 a.m., Eastern Time (ET). Accompanying presentation materials will be available in the Investor Relations section of the Company’s website at https://www.pangaeals.com/investors/.

To participate in the live teleconference:

Domestic Live: 1-800-245-3047
International Live: 1-203-518-9765
Conference ID:     PANLQ323     

To listen to a replay of the teleconference, which will be available through November 16, 2023:

Domestic Replay: 1-800-839-7414
International Replay: 1-402-220-6068




Pangaea Logistics Solutions Ltd.
Consolidated Statements of Operations
(unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Revenues:
Voyage revenue$127,884,506 $173,167,990 $346,300,186 $522,693,814 
Charter revenue3,797,528 11,309,147 16,636,920 49,089,682 
Terminal & Stevedore Revenue3,934,154 — 4,453,811 — 
Total revenue135,616,188 184,477,137 367,390,917 571,783,496 
Expenses:
Voyage expense59,075,208 74,716,194 170,349,472 207,874,485 
Charter hire expense25,466,886 50,750,809 77,183,388 194,175,432 
Vessel operating expense14,252,533 15,361,640 41,070,199 41,479,173 
   Terminal & Stevedore Expenses3,517,736 — 3,892,318 — 
General and administrative5,500,121 5,776,666 17,115,013 16,195,441 
Depreciation and amortization8,092,495 7,365,561 22,546,350 21,960,413 
Loss on impairment of vessel— — — 3,007,809 
Loss on sale of vessel— — 1,172,196 318,032 
Total expenses115,904,979 153,970,870 333,328,936 485,010,785 
Income from operations19,711,209 30,506,267 34,061,981 86,772,711 
Other income (expense): 
Interest expense(4,348,686)(4,400,473)(12,724,920)(11,445,249)
Interest income775,504 284,154 2,867,914 323,025 
Income attributable to Non-controlling interest recorded as long-term liability interest expense
(267,198)(2,418,844)(1,027,798)(5,961,851)
Unrealized gain (loss) on derivative instruments, net4,531,912 (4,508,758)2,760,059 (510,093)
Other income(212,639)298,679 422,636 517,117 
Total other income (expense), net478,893 (10,745,242)(7,702,109)(17,077,051)
Net income20,190,102 19,761,025 26,359,872 69,695,660 
Income attributable to non-controlling interests(1,321,811)(972,611)(1,172,774)(5,706,848)
Net income attributable to Pangaea Logistics Solutions Ltd.$18,868,291 $18,788,414 $25,187,098 $63,988,812 
Earnings per common share:
Basic$0.42 $0.42 $0.56 $1.44 
Diluted$0.42 $0.42 $0.56 $1.43 
Weighted average shares used to compute earnings per common share:
Basic44,775,438 44,415,575 44,754,620 44,386,628 
Diluted45,081,668 44,640,278 45,108,039 44,624,228 



Pangaea Logistics Solutions Ltd.
Consolidated Balance Sheets
September 30, 2023December 31, 2022
(unaudited)(audited)
Assets
Current assets
Cash and cash equivalents$87,358,220 $128,384,606 
Accounts receivable (net of allowance of $5,301,297 and $4,367,848 at September 30, 2023 and December 31, 2022, respectively)53,498,562 36,755,149 
Bunker inventory26,347,230 29,104,436 
Advance hire, prepaid expenses and other current assets31,280,425 28,266,831 
Total current assets198,484,437 222,511,022 
Fixed assets, net479,980,216 476,524,752 
Finance lease right of use assets, net40,951,455 43,921,569 
Goodwill3,104,800 — 
Other non-current Assets6,073,002 5,284,127 
Total assets$728,593,910 $748,241,470 
Liabilities and stockholders' equity
Current liabilities
Accounts payable, accrued expenses and other current liabilities$42,374,839 $38,554,131 
Deferred revenue13,797,326 20,883,958 
Current portion of secured long-term debt31,505,463 15,782,530 
Current portion of finance lease liabilities26,630,754 16,365,075 
Dividend payable977,592 626,178 
Total current liabilities115,285,974 92,211,872 
Secured long-term debt, net70,953,795 98,819,739 
Finance lease liabilities, net146,474,158 168,513,939 
Long-term liabilities - other18,502,188 19,974,390 
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.0001 par value, 1,000,000 shares authorized and no shares issued or outstanding— — 
Common stock, $0.0001 par value, 100,000,000 shares authorized; 46,466,622 shares issued and outstanding at September 30, 2023; 45,898,395 shares issued and outstanding at December 31, 20224,648 4,590 
Additional paid-in capital164,160,253 162,894,080 
Retained earnings162,544,652 151,327,392 
Total Pangaea Logistics Solutions Ltd. equity326,709,553 314,226,062 
Non-controlling interests50,668,242 54,495,468 
Total stockholders' equity377,377,795 368,721,530 
Total liabilities and stockholders' equity$728,593,910 $748,241,470 

Pangaea Logistics Solutions, Ltd.
Consolidated Statements of Cash Flows

Nine Months Ended September 30,
20232022
Operating activities(unaudited)(unaudited)
Net income$26,359,872 $69,695,660 
Adjustments to reconcile net income to net cash provided by operations: 
Depreciation and amortization expense22,546,350 21,960,413 
Amortization of deferred financing costs701,275 764,897 
Amortization of prepaid rent91,048 91,453 
Unrealized (gain) loss on derivative instruments(2,760,059)510,093 
Income from equity method investee(417,636)(517,117)
Earnings attributable to non-controlling interest recorded as other long term liability1,027,798 5,961,851 
Provision for doubtful accounts933,449 1,282,624 
Loss on impairment of vessel— 3,007,809 
Loss on sale of vessel1,172,196 318,032 
Drydocking costs(3,368,800)(5,972,024)
Share-based compensation1,393,514 1,457,972 
Change in operating assets and liabilities:
Accounts receivable(17,676,862)10,633,346 
Bunker inventory2,757,206 (3,504,215)
Advance hire, prepaid expenses and other current assets885,264 14,095,660 
Accounts payable, accrued expenses and other current liabilities3,324,586 (2,946,749)
Deferred revenue(7,086,632)(14,971,451)
Net cash provided by operating activities29,882,569 101,868,254 
Investing activities  
Purchase of vessels and vessel improvements(27,217,355)(18,370,977)
Purchase of fixed assets and equipment— 187,638 
Contributions to non-consolidated subsidiaries(275,000)(18,505)
Proceeds from sale of vessel8,037,804 8,400,000 
Acquisitions, net of cash acquired(7,200,000)— 
Dividends received from equity method investments1,637,500 — 
Net cash used in investing activities(25,017,051)(11,511,844)
Financing activities
Payments of financing fees and issuance costs— (331,317)
Payments of long-term debt(12,435,039)(12,223,052)
Proceeds from finance leases— 15,000,000 
Payments of finance lease obligations(12,211,158)(11,808,661)
Dividends paid to non-controlling interests(5,000,000)(5,000,000)
Accrued common stock dividends paid(13,618,424)(8,966,039)
Cash paid for incentive compensation shares relinquished(127,283)(287,629)
Payments to non-controlling interest recorded as long-term liability(2,500,000)— 
Net cash used in financing activities(45,891,904)(28,616,698)
Net (decrease) increase in cash and cash equivalents(41,026,386)61,739,712 
Cash and cash equivalents at beginning of period128,384,606 56,208,902 
Cash and cash equivalents at end of period$87,358,220 $117,948,614 

Pangaea Logistics Solutions Ltd.
Reconciliation of Non-GAAP Measures
(unaudited)

Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Net Transportation and Service Revenue
Gross Profit$25,240,555 $36,301,324 $52,433,372 $106,349,167 
Add:
Vessel Depreciation and Amortization8,063,270 7,347,170 22,462,168 21,905,239 
Net transportation and service revenue$33,303,825 $43,648,494 $74,895,540 $128,254,406 
Adjusted EBITDA
Net Income20,190,102 19,761,025 26,359,872 69,695,660 
Interest expense, net3,573,182 4,116,319 9,857,006 11,122,224 
Income attributable to Non-controlling interest recorded as long-term liability interest expense
267,198 2,418,844 1,027,798 5,961,851 
Depreciation and amortization8,092,495 7,365,561 22,546,350 21,960,413 
EBITDA32,122,977 33,661,749 59,791,026 108,740,148 
Non-GAAP Adjustments:
Loss on impairment of vessels— — — 3,007,809 
Loss on sale of vessels— — 1,172,196 318,032 
Share-based compensation270,007 319,188 1,393,514 1,457,972 
Unrealized (gain) loss on derivative instruments, net(4,531,912)4,508,758 (2,760,059)510,093 
Other non-recurring items19,476 — 445,178 — 
Adjusted EBITDA$27,880,548 $38,489,695 $60,041,855 $114,034,054 
Earnings Per Common Share
Net income attributable to Pangaea Logistics Solutions Ltd.$18,868,291 $18,788,414 $25,187,098 $63,988,812 
Weighted average number of common shares outstanding - basic44,775,438 44,415,575 44,754,620 44,386,628 
Weighted average number of common shares outstanding - diluted45,081,668 44,640,278 45,108,039 44,624,228 
Earnings per common share - basic$0.42 $0.42 $0.56 $1.44 
Earnings per common share - diluted$0.42 $0.42 $0.56 $1.43 
Adjusted EPS
Net Income attributable to Pangaea Logistics Solutions Ltd.$18,868,291 $18,788,414 $25,187,098 $63,988,812 
Non-GAAP
Add: loss on impairment of vessels— — — 3,007,809 
Loss on sale of vessels— — 1,172,196 318,032 
Unrealized (gain) loss on derivative instruments(4,531,912)4,508,758 (2,760,059)510,093 
Other non-recurring items19,476 $— 445,178 — 
Non-GAAP adjusted net income attributable to Pangaea Logistics Solutions Ltd.$14,355,855 $23,297,172 $24,044,413 $67,824,746 
Weighted average number of common shares - basic44,775,438 44,415,575 44,754,620 44,386,628 
Weighted average number of common shares - diluted45,081,668 44,640,278 45,108,039 44,624,228 
Adjusted EPS - basic$0.32 $0.52 $0.54 $1.53 
Adjusted EPS - diluted$0.32 $0.52 $0.53 $1.52 


INFORMATION ABOUT NON-GAAP FINANCIAL MEASURES. As used herein, “GAAP” refers to accounting principles generally accepted in the United States of America. To supplement our consolidated financial statements prepared and presented in accordance with GAAP, this earnings release discusses non-GAAP financial measures, including non-GAAP net revenue and non-GAAP adjusted EBITDA. This is considered a non-GAAP financial measure as defined in Rule 101 of Regulation G promulgated by the Securities and Exchange Commission. Generally, a non-GAAP financial measure is a numerical measure of a company’s historical or future performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

We use non-GAAP financial measures for internal financial and operational decision making purposes and as a means to evaluate period-to-period comparisons of the performance and results of operations of our core business. Our management believes that non-GAAP financial measures provide meaningful supplemental information regarding the performance of our core business by excluding charges that are not incurred in the normal course of business. Non-GAAP financial measures also facilitate management's internal planning and comparisons to our historical performance and liquidity. We believe certain non-GAAP financial measures are useful to investors as they allow for greater transparency with respect to key metrics used by management in its financial and operational decision making and are used by our institutional investors and the analyst community to help them analyze the performance and operational results of our core business.

Gross Profit. Gross profit represents total revenue less net transportation and service revenue and less vessel depreciation and amortization.

Net transportation and service revenue. Net transportation and service revenue represents total revenue less the total direct costs of transportation and services, which includes charter hire, voyage and vessel operating expenses and terminal & stevedore expenses. Net transportation and service revenue is included because it is used by management and certain investors to measure performance by comparison to other logistic service providers. Net transportation and service revenue is not an item recognized by the generally accepted accounting principles in the United States of America, or U.S. GAAP, and should not be considered as an alternative to net income, operating income, or any other indicator of a company's operating performance required by U.S. GAAP. Pangaea’s definition of net transportation and service revenue used here may not be comparable to an operating measure used by other companies.

Adjusted EBITDA and adjusted EPS. Adjusted EBITDA represents net income (or loss), determined in accordance with U.S. GAAP, excluding interest expense, interest income, income taxes, depreciation and amortization, loss on impairment, loss on sale and leaseback of vessels, share-based compensation, other non-operating income and/or expense and other non-recurring items, if any. Earnings per share represents net income divided by the weighted average number of common shares outstanding. Adjusted earnings per share represents net income attributable to Pangaea Logistics Solutions Ltd. plus, when applicable, loss on sale of vessel, loss on sale and leaseback of vessel, loss on impairment of vessel, unrealized gains and losses on derivative instruments, and certain non-recurring charges, divided by the weighted average number of shares of common stock.

There are limitations related to the use of net revenue versus income from operations, adjusted EBITDA versus income from operations, and adjusted EPS versus EPS calculated in accordance with GAAP. In particular, Pangaea’s definition of adjusted EBITDA used here are not comparable to EBITDA.

The table set forth above provides a reconciliation of the non-GAAP financial measures presented during the period to the most directly comparable financial measures prepared in accordance with GAAP.

About Pangaea Logistics Solutions Ltd.

Pangaea Logistics Solutions Ltd. (Nasdaq: PANL) provides logistics services to a broad base of industrial customers who require the transportation of a wide variety of dry bulk cargoes, including grains, pig iron, hot briquetted iron, bauxite, alumina, cement clinker, dolomite, and limestone. The Company addresses the transportation needs of its customers with a comprehensive set of services and activities, including cargo loading, cargo discharge, vessel chartering, and voyage planning. Learn more at www.pangaeals.com.



Investor Relations Contacts
Gianni Del SignoreStefan C. Neely
Chief Financial OfficerVallum Advisors
401-846-7790
Investors@pangaeals.comPANL@val-adv.com

Forward-Looking Statements

Certain statements in this press release are “forward-looking statements” within the meaning of the Private Securities Litigation Act of 1995. These forward-looking statements are based on our current expectations and beliefs and are subject to a number of risk factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The Company disclaims any obligation to publicly update or revise these statements whether as a result of new information, future events or otherwise, except as required by law. Such risks and uncertainties include, without limitation, the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand for dry bulk shipping capacity, changes in our operating expenses, including bunker prices, dry-docking and insurance costs, the market for our vessels, availability of financing and refinancing, charter counterparty performance, ability to obtain financing and comply with covenants in such financing arrangements, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, vessels breakdowns and instances of off-hires and other factors, as well as other risks that have been included in filings with the Securities and Exchange Commission, all of which are available at www.sec.gov.