PR Newswire
NEWPORT, R.I., Aug. 9, 2023
NEWPORT, R.I., Aug. 9, 2023 /PRNewswire/ -- 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 June 30, 2023.
SECOND QUARTER 2023 RESULTS
(As compared to the second quarter 2022)
- Net income attributable to Pangaea of $2.8 million, or $0.06 per diluted share
- Adjusted net income attributable to Pangaea of $4.6 million, or $0.10 per diluted share
- Operating cash flow of $2.0 million, a decrease of 95% y/y
- Adjusted EBITDA of $15.9 million, a decrease of 64% y/y
- Time Charter Equivalent ("TCE") rates earned by Pangaea of $15,558 per day, a decline of 43% y/y
- Pangaea's TCE rates exceeded the average Baltic Panamax and Supramax indices by approximately 49%
- Ratio of net debt to trailing twelve-month Adjusted EBITDA of 2.1x
- Completed the strategic acquisition of marine port terminal operations, expanding logistics service offerings
- Expanded owned vessel fleet to 25 through the acquisition of the 61,000 dwt Bulk Prudence
For the second quarter ended June 30, 2023, Pangaea reported non-GAAP adjusted net income of $4.6 million, or $0.10 per diluted share, on total revenue of $118.1 million. Second quarter TCE rates declined 43% on a year-over-year basis, while total shipping days, which include both voyage and time charter days, declined 14% to 4,056 days, when compared to the year-ago period.
The TCE earned was $15,558 per day for the three months ended June 30, 2023, compared to an average of $27,139 per day for the same period in 2022. During the second quarter 2023, the Company's average TCE rate exceeded the benchmark average Baltic Panamax and Supramax indices by approximately 49%, supported by Pangaea's long-term contracts of affreightment ("COAs"), specialized fleet, and cargo-focused strategy.
Total Adjusted EBITDA decreased 64% to $15.9 million in the second quarter, as demand weakness negatively impacted market rates. Adjusted EBITDA margin declined to 9.0% in the second quarter 2023, when compared to the year-ago period, driven by lower market rates.
As of June 30, 2023, the Company had $84.3 million in cash and equivalents. Total debt, including lease finance obligations was $283 million. At the end of the second quarter 2023, the Company's net debt to trailing twelve-month adjusted EBITDA was at 2.1x. During the three months ended June 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 August 8th the Company has booked approximately 3,500 total shipping days generating a TCE of $16,700 per day for the third quarter.
The Company's Board of Directors declared a quarterly cash dividend of $0.10 per common share, to be paid on September 15, 2023, to all shareholders of record as of September 1, 2023.
MANAGEMENT COMMENTARY
"During a period of softer dry bulk rates, our flexible chartered-in strategy has positioned Pangaea to consistently realize a premium TCE rate well above the benchmark indices," stated Mark Filanowski, Chief Executive Officer of Pangaea Logistics Solutions. "While on a year-to-date basis, excess global dry bulk shipping capacity has resulted in lower overall market rates, our TCE rate exceeded the broader market by almost 50% in the second quarter, further highlighting the durability of our business model. In the third quarter, we anticipate a sequential improvement in our results as we enter peak demand season in the Arctic. At this time, all of our Ice Class 1A vessels are fully booked through October, positioning us to realize above-market rates as we enter the second half of the year."
"Pangaea continues to maintain a disciplined capital allocation strategy designed to drive long-term value creation for our shareholders," continued Filanowski. "During the second quarter, we completed the acquisition of the 61,000 dwt Bulk Prudence, which we purchased with cash-on-hand. In addition, we closed on the previously announced acquisition of port terminal operations in Fort Lauderdale, Florida and Baltimore, Maryland, positioning us to further expand our on-shore capabilities as we develop an integrated transportation and logistics platform of scale. Finally, we continue to return capital to shareholders through a consistent quarterly cash dividend, with more than $9 million having been paid to shareholders on a year-to-date basis. Despite broader market softness, our premium rate model positions us to support a our return of capital strategy, in line with our holistic focus on total shareholder returns."
"Looking ahead, we remain optimistic about the fundamentals in the dry bulk market with a historically low order book and a stable demand outlook.," concluded Filanowski. "Entering the second half of the year, usually our strongest season, we are well positioned to drive improved utilization of our fleet and logistics operations. At the same time, we will continue to evaluate strategic investments in complementary assets that further enhance our unique value proposition, drive margin expansion, and support profitable growth for our shareholders."
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. In June 2023, Pangaea closed on the acquisition of marine port terminal operations in Port Everglades/Ft. Lauderdale, Port of Palm Beach, Florida, and Port of Baltimore, Maryland. With this acquisition, Pangaea strategically expands its North American terminal network to include the mid-Atlantic and southeastern United States. The acquisition provides Pangaea with additional dry bulk distribution capabilities within growing commerce centers, while augmenting its integrated ocean freight and shoreside solutions offering. The Company is actively leveraging its expanding footprint to grow its onshore relationships with new and existing customers.
Continue to drive strong fleet utilization. In the second quarter, Pangaea's 25 owned vessels were fully utilized and supplemented with an average of 20 chartered-in vessels to support cargo and COA commitments. Utilizing its nimble fleet approach, the Company reduced its exposure to the market by redelivering chartered-in vessels and reducing its average chartered-in fleet from 25 vessels on average during 2022 to 20 vessels in the second quarter 2023. In light of continued softness in the market, the Company was able to continue to meet customer demands by maintaining its chartered-in fleet at 20 vessels.
Continue to drive fleet upgrades and renewals. In June 2023, Pangaea completed the acquisition of the 61,000 dwt Bulk Prudence in the second-hand market for $26.6 million cash. 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.
SECOND QUARTER 2023 CONFERENCE CALL
The Company's management team will host a conference call to discuss the Company's financial results on Thursday, August 10, 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 listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download, and install any necessary audio software.
To participate in the live teleconference:
Domestic Live: 1-800-225-9448
International Live: 1-203-518-9708
Conference ID: PANLQ223
To listen to a replay of the teleconference, which will be available through August 17, 2023:
Domestic Replay: 1-800-934-5153
International Replay: 1-402-220-1182
Pangaea Logistics Solutions Ltd. Consolidated Statements of Operations (unaudited) | |||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2023 | 2022 | 2022 | 2022 | ||||
Revenues: | |||||||
Voyage revenue | $ 110,465,557 | $ 173,189,073 | $ 218,415,680 | $ 349,525,824 | |||
Charter revenue | 7,090,440 | 22,354,883 | 12,839,392 | 37,780,535 | |||
Terminal & Stevedore Revenue | 519,657 | — | 519,657 | — | |||
Total revenue | 118,075,654 | 195,543,956 | 231,774,729 | 387,306,359 | |||
Expenses: | |||||||
Voyage expense | 54,459,633 | 67,907,824 | 111,274,264 | 133,158,291 | |||
Charter hire expense | 29,125,662 | 65,713,016 | 51,716,502 | 143,424,623 | |||
Vessel operating expense | 13,210,851 | 12,929,700 | 26,817,666 | 26,117,533 | |||
Terminal & Stevedore Expenses | 374,582 | — | 374,582 | — | |||
General and administrative | 5,923,159 | 5,137,387 | 11,614,892 | 10,418,775 | |||
Depreciation and amortization | 7,126,995 | 7,293,433 | 14,453,855 | 14,594,852 | |||
Loss on impairment of vessel | — | — | — | 3,007,809 | |||
Loss on sale of vessel | — | 318,032 | 1,172,196 | 318,032 | |||
Total expenses | 110,220,882 | 159,299,392 | 217,423,957 | 331,039,915 | |||
Income from operations | 7,854,772 | 36,244,564 | 14,350,772 | 56,266,444 | |||
Other income (expense): | |||||||
Interest expense | (4,125,720) | (3,673,064) | (8,376,234) | (7,044,776) | |||
Interest income | 1,042,564 | 38,332 | 2,092,410 | 38,871 | |||
Income attributable to Non-controlling interest recorded as long-term liability interest expense | (905,337) | (1,702,674) | (760,600) | (3,543,007) | |||
Unrealized (loss) gain on derivative instruments, net | (1,348,284) | (3,501,649) | (1,771,853) | 3,998,665 | |||
Other income | 248,863 | 81,231 | 635,275 | 218,438 | |||
Total other (expense) income, net | (5,087,914) | (8,757,824) | (8,181,002) | (6,331,809) | |||
Net income | 2,766,858 | 27,486,740 | 6,169,770 | 49,934,635 | |||
Loss (income) attributable to non-controlling interests | 77,682 | (2,454,307) | 149,037 | (4,734,237) | |||
Net income attributable to Pangaea Logistics Solutions Ltd. | $ 2,844,540 | $ 25,032,433 | $ 6,318,807 | $ 45,200,398 | |||
Earnings per common share: | |||||||
Basic | $ 0.06 | $ 0.56 | $ 0.14 | $ 1.02 | |||
Diluted | $ 0.06 | $ 0.56 | $ 0.14 | $ 1.00 | |||
Weighted average shares used to compute earnings per common share: | |||||||
Basic | 44,775,438 | 44,430,487 | 44,744,039 | 44,411,025 | |||
Diluted | 45,127,972 | 45,070,533 | 45,122,019 | 45,129,077 | |||
Pangaea Logistics Solutions Ltd. Consolidated Balance Sheets | |||
June 30, 2023 | December 31, 2022 | ||
(unaudited) | (audited) | ||
Assets | |||
Current assets | |||
Cash and cash equivalents | $ 84,295,860 | $ 128,384,606 | |
Accounts receivable (net of allowance of $5,497,118 and $4,367,848 at June 30, | 42,822,372 | 36,755,149 | |
Bunker inventory | 27,452,209 | 29,104,436 | |
Advance hire, prepaid expenses and other current assets | 32,359,905 | 28,266,831 | |
Total current assets | 186,930,346 | 222,511,022 | |
Fixed assets, net | 486,380,572 | 476,524,752 | |
Finance lease right of use assets, net | 42,050,361 | 43,921,569 | |
Goodwill | 3,104,800 | — | |
Other non-current Assets | 6,106,786 | 5,284,127 | |
Total assets | $ 724,572,865 | $ 748,241,470 | |
Liabilities and stockholders' equity | |||
Current liabilities | |||
Accounts payable, accrued expenses and other current liabilities | $ 46,705,982 | $ 38,554,131 | |
Deferred revenue | 14,500,065 | 20,883,958 | |
Current portion of secured long-term debt | 32,259,599 | 15,782,530 | |
Current portion of finance lease liabilities | 16,423,228 | 16,365,075 | |
Dividend payable | 808,862 | 626,178 | |
Total current liabilities | 110,697,736 | 92,211,872 | |
Secured long-term debt, net | 73,441,002 | 98,819,739 | |
Finance lease liabilities, net | 160,627,406 | 168,513,939 | |
Long-term liabilities - other | 18,234,990 | 19,974,390 | |
Commitments and contingencies | |||
Stockholders' equity: | |||
Preferred stock, $0.0001 par value, 1,000,000 shares authorized and no shares issued | — | — | |
Common stock, $0.0001 par value, 100,000,000 shares authorized; 46,466,622 | 4,648 | 4,590 | |
Additional paid-in capital | 163,890,246 | 162,894,080 | |
Retained earnings | 148,330,406 | 151,327,392 | |
Total Pangaea Logistics Solutions Ltd. equity | 312,225,300 | 314,226,062 | |
Non-controlling interests | 49,346,431 | 54,495,468 | |
Total stockholders' equity | 361,571,731 | 368,721,530 | |
Total liabilities and stockholders' equity | $ 724,572,865 | $ 748,241,470 | |
Pangaea Logistics Solutions, Ltd. Consolidated Statements of Cash Flows | |||
Six Months Ended June 30, | |||
2023 | 2022 | ||
Operating activities | Unaudited | Unaudited | |
Net income | $ 6,169,770 | $ 49,934,635 | |
Adjustments to reconcile net income to net cash provided by operations: | |||
Depreciation and amortization expense | 14,453,855 | 14,594,852 | |
Amortization of deferred financing costs | 471,582 | 499,703 | |
Amortization of prepaid rent | 60,564 | 60,969 | |
Unrealized loss (gain) on derivative instruments | 1,771,853 | (3,998,665) | |
Income from equity method investee | (635,275) | (218,438) | |
Earnings attributable to non-controlling interest recorded as other long term liability | 760,600 | 3,543,007 | |
Provision for doubtful accounts | 1,129,270 | 518,796 | |
Loss on impairment of vessel | — | 3,007,809 | |
Loss on sale of vessel | 1,172,196 | 318,032 | |
Drydocking costs | (3,361,280) | (4,858,510) | |
Share-based compensation | 1,123,507 | 1,138,785 | |
Change in operating assets and liabilities: | |||
Accounts receivable | (7,196,493) | 12,640,090 | |
Bunker inventory | 1,652,227 | (25,675,924) | |
Advance hire, prepaid expenses and other current assets | (3,503,097) | 12,286,477 | |
Accounts payable, accrued expenses and other current liabilities | 5,894,024 | 13,292,238 | |
Deferred revenue | (6,383,893) | (7,858,791) | |
Net cash provided by operating activities | 13,579,410 | 69,225,065 | |
Investing activities | |||
Purchase of vessels and vessel improvements | (27,039,525) | (18,501,875) | |
Purchase of fixed assets and equipment | — | (71,416) | |
Contributions to non-consolidated subsidiaries | — | (18,505) | |
Proceeds from sale of vessel | 8,933,700 | 8,400,000 | |
Acquisitions, net of cash acquired | (7,200,000) | — | |
Dividends received from equity method investments | 1,627,500 | — | |
Net cash used in investing activities | (23,678,325) | (10,191,796) | |
Financing activities | |||
Payments of financing fees and issuance costs | — | (331,317) | |
Payments of long-term debt | (9,096,390) | (9,010,117) | |
Proceeds from finance leases | — | 15,000,000 | |
Payments of finance lease obligations | (8,133,049) | (7,808,388) | |
Dividends paid to non-controlling interests | (5,000,000) | (5,000,000) | |
Accrued common stock dividends paid | (9,133,109) | (5,629,329) | |
Cash paid for incentive compensation shares relinquished | (127,283) | (287,630) | |
Payments to non-controlling interest recorded as long-term liability | (2,500,000) | — | |
Net cash used in financing activities | (33,989,831) | (13,066,781) | |
Net (decrease) increase in cash and cash equivalents | (44,088,746) | 45,966,488 | |
Cash and cash equivalents at beginning of period | 128,384,606 | ||
