Pangaea Logistics Solutions Ltd. Reports Financial Results for the Quarter Ended June 30, 2023
- Pangaea reported adjusted net income of $4.6 million for the second quarter of 2023.
- The company completed the strategic acquisition of marine port terminal operations.
- Pangaea expanded its owned vessel fleet to 25 through the acquisition of the Bulk Prudence.
- Operating cash flow decreased by 95% year-over-year to $2.0 million.
- Adjusted EBITDA decreased by 64% to $15.9 million.
- TCE rates earned by Pangaea declined by 43% to $15,558 per day.
SECOND QUARTER 2023 RESULTS
(As compared to the second quarter 2022)
- Net income attributable to Pangaea of
, or$2.8 million per diluted share$0.06 - Adjusted net income attributable to Pangaea of
, or$4.6 million per diluted share$0.10 - Operating cash flow of
, a decrease of$2.0 million 95% y/y - Adjusted EBITDA of
, a decrease of$15.9 million 64% y/y - Time Charter Equivalent ("TCE") rates earned by Pangaea of
per day, a decline of$15,558 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
The TCE earned was
Total Adjusted EBITDA decreased
As of June 30, 2023, the Company had
As of August 8th the Company has booked approximately 3,500 total shipping days generating a TCE of
The Company's Board of Directors declared a quarterly cash dividend of
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
"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
"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
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
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 | ||||
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 | 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, | — | — | |
Common stock, | 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 | 56,208,902 | |
Cash and cash equivalents at end of period | $ 84,295,860 | $ 102,175,390 |
Pangaea Logistics Solutions Ltd. Reconciliation of Non-GAAP Measures (unaudited) | ||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||
2023 | 2022 | 2023 | 2022 | |||||
Net Transportation and Service Revenue | ||||||||
Gross Profit | $ 13,805,410 | $ 41,699,983 | $ 27,192,817 | $ 70,011,060 | ||||
Add: | ||||||||
Vessel Depreciation and Amortization | 7,099,516 | 7,293,433 | 14,398,898 | 14,594,852 | ||||
Net transportation and service revenue | $ 20,904,926 | $ 48,993,416 | $ 41,591,715 | $ 84,605,912 | ||||
Adjusted EBITDA | ||||||||
Net Income | 2,766,858 | 27,486,740 | 6,169,770 | 49,934,635 | ||||
Interest expense, net | 3,083,156 | 3,634,732 | 6,283,824 | 7,005,905 | ||||
Income attributable to Non-controlling interest recorded as long-term liability interest expense | 905,337 | 1,702,674 | 760,600 | 3,543,007 | ||||
Depreciation and amortization | 7,126,995 | 7,293,433 | 14,453,855 | 14,594,852 | ||||
EBITDA | 13,882,346 | 40,117,579 | 27,668,049 | 75,078,399 | ||||
Non-GAAP Adjustments: | ||||||||
Loss on impairment of vessels | — | — | — | 3,007,809 | ||||
Loss on sale of vessels | — | 318,032 | 1,172,196 | 318,032 | ||||
Share-based compensation | 267,073 | 310,979 | 1,123,507 | 1,138,785 | ||||
Unrealized loss (gain) on derivative instruments, net | 1,348,284 | 3,501,649 | 1,771,853 | (3,998,665) | ||||
Other non-recurring items | 425,702 | — | 425,702 | — | ||||
Adjusted EBITDA | $ 15,923,405 | $ 44,248,239 | $ 32,161,307 | $ 75,544,360 | ||||
Earnings Per Common Share | ||||||||
Net income attributable to Pangaea Logistics Solutions Ltd. | $ 2,844,540 | $ 25,032,433 | $ 6,318,807 | $ 45,200,398 | ||||
Weighted average number of common shares outstanding - basic | 44,775,438 | 44,430,487 | 44,744,039 | 44,411,025 | ||||
Weighted average number of common shares outstanding - diluted | 45,127,972 | 45,070,533 | 45,122,019 | 45,129,077 | ||||
Earnings per common share - basic | $ 0.06 | $ 0.56 | $ 0.14 | $ 1.02 | ||||
Earnings per common share - diluted | $ 0.06 | $ 0.56 | $ 0.14 | $ 1.00 | ||||
Adjusted EPS | ||||||||
Net Income attributable to Pangaea Logistics Solutions Ltd. | $ 2,844,540 | $ 25,032,433 | $ 6,318,807 | $ 45,200,398 | ||||
Non-GAAP | ||||||||
Add: loss on impairment of vessels | — | — | — | 3,007,809 | ||||
Loss on sale of vessels | — | 318,032 | 1,172,196 | 318,032 | ||||
Unrealized loss (gain) on derivative instruments | 1,348,284 | 3,501,649 | 1,771,853 | (3,998,665) | ||||
Other non-recurring items | 425,702 | $ — | 425,702 | — | ||||
Non-GAAP adjusted net income attributable to Pangaea Logistics Solutions Ltd. | $ 4,618,526 | $ 28,852,114 | $ 9,688,558 | $ 44,527,574 | ||||
Weighted average number of common shares - basic | 44,775,438 | 44,430,487 | 44,744,039 | 44,411,025 | ||||
Weighted average number of common shares - diluted | 45,127,972 | 45,070,533 | 45,122,019 | 45,129,077 | ||||
Adjusted EPS - basic | $ 0.10 | $ 0.65 | $ 0.22 | $ 1.00 | ||||
Adjusted EPS - diluted | $ 0.10 | $ 0.64 | $ 0.21 | $ 0.99 |
INFORMATION ABOUT NON-GAAP FINANCIAL MEASURES. As used herein, "GAAP" refers to accounting principles generally accepted in
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
Adjusted EBITDA and adjusted EPS. Adjusted EBITDA represents net income (or loss), determined in accordance with
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 Signore | Stefan C. Neely | |
Chief Financial Officer | Vallum Advisors | |
401-846-7790 | ||
Investors@pangaeals.com | PANL@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.
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SOURCE Pangaea Logistics Solutions Ltd.
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