August 12, 2020

Pangaea Logistics Solutions Ltd. Reports Financial Results for the Quarter Ended June 30, 2020

NEWPORT, R.I., Aug. 12, 2020 /PRNewswire/ — Pangaea Logistics Solutions Ltd. (“Pangaea” or the “Company”) (NASDAQ: PANL), a global provider…

NEWPORT, R.I., Aug. 12, 2020 /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, 2020.

2nd Quarter Highlights

  • Net income attributable to Pangaea Logistics Solutions Ltd. was $3.0 million for three months ended June 30, 2020 as compared to $4.0 million of net income for the same period of 2019.
    • Non-GAAP adjusted net income attributable to Pangaea Logistics Solutions Ltd. of $3.7 million as compared to $3.8 million for the three months ended June 30, 2019.
  • Net income per share was $0.07 for three months ended June 30, 2020 as compared to earnings per share of $0.09 for the same period of 2019.
  • Pangaea’s TCE rates were $10,733 for the three months ended June 30, 2020 and $12,933 for the three months ended June 30, 2019. The market average for the second quarter of 2020 was approximately $5,548, giving the Company an overall average premium over market rates of approximately $5,185 or 93%.
  • Adjusted EBITDA of $10.7 million for the three months ended June 30, 2020.
  • Total revenue decreased to $70.4 million for the three months ended June 30, 2020, from $83.3 million for the three months ended June 30, 2019 due to a decrease in market hire and freight rates.
  • At the end of the quarter, Pangaea had $49.5 million in cash, restricted cash and cash equivalents.

Ed Coll, Chief Executive Officer of Pangaea Logistics Solutions, commented:

“Our strong second quarter results outperformed in a challenging dry bulk market that tested historic lows in April and May. Adhering to our strategy in turbulent markets, we limited our exposure by adjusting our fleet composition, redelivering chartered vessels back to their owners over the last several months and replacing them when needed at lower cost. Second quarter 2020 operating income of $6.1 million, before non-cash impairment charges, is a remarkable turnaround from our first quarter of 2020 operating loss of $2.3 million. Our achieved TCE rate of $10,733 per day represented an outperformance of $5,548, or 93% premium over the average market rates.

Mr. Coll added, “Looking forward we move into our seasonally strong summer ice season in a strong position. Although the market has recovered somewhat since June, we are watching global economic output and the disruptions caused by COVID-19, from changes to our working environment to rotating crews aboard our vessels. We sincerely empathize with the hardships our people and their familiars are facing, ashore and aboard our vessels. Our results are encouraging, but we expect, and will prepare for, continued uncertainty and turbulence in our markets over the next few quarters.”

Results for the three months ended June 30, 2020 and 2019

Total revenue was $70.4 million for the three months ended June 30, 2020, compared with $83.3 million for the three months ended June 30, 2019. The 15% decrease in revenues was mainly attributed to the decrease in the average time charter rates achieved by our vessels during the second quarter of 2020 compared to the same period in 2019.

Time Charter Equivalent rate (TCE) was $10,733 per day for the three months ended June 30, 2020, compared to an average of $12,933 per day for the same period in 2019. However, the achieved premium over the average market increased by $5,185 per day or 93% for the three months ended June 30, 2020. The total number of shipping days remained relatively consistent with a  1% increase to 3,600 days in the three months ended June 30, 2020, compared to 3,562 for the same period in 2019, predominantly due to the increase in voyage days.

Liquidity and Cash Flows

Cash, restricted cash and cash equivalents were $49.5 million as of June 30, 2020, compared with $53.1 million on December 31, 2019.

At June 30, 2020 and December 31, 2019, the Company had working capital of $37.3 million and $37.1 million, respectively. Operating cash flows during the six months ended June 30, 2020 was a net inflow of $6.9 million as compared to a net inflow of $19.6 million during the same period of 2019.

Investing cash flows during the six months ended June 30, 2020 was a net inflow of $5.8 million as compared to a net outflow of $33.5 million during the same period of 2019. Financing cash flows during the six months ended June 30, 2020 was a net outflow of $16.2 million as compared to net inflow of $1.5 million during the same period of 2019. The Company sold two vessels and paid off a lease obligation during the six months ended June 30, 2020.

Subsequent Event

On June 29, 2020, the Company entered into a memorandum of agreement to sell the Bulk Beothuk, a 2002-built Supramax vessel, to a third party for $4.6 million less a broker commission payable to a third party. The vessel was delivered to its new owner on August 4, 2020.

Conference Call Details

The Company’s management team will host a conference call to discuss the Company’s financial results on August 13, 2020 at 8:00 a.m., Eastern Time (ET). To access the conference call, please dial (888) 895-3561 (domestic) or (904) 685-6494 (international) approximately ten minutes before the scheduled start time and reference ID#8947025.

A supplemental slide presentation will accompany this quarter’s conference call and can be found attached to the Current Report on Form 8-K that the Company filed concurrently with this press release. This document will be available at http://www.pangaeals.com/company-filings or at sec.gov.

A recording of the call will also be available for two weeks and can be accessed by calling (855) 859-2056 (domestic) or (404) 537-3406 (international) and referencing ID#8947025.

Pangaea Logistics Solutions Ltd.

Consolidated Statements of Operations

(unaudited)



Three Months Ended June 30,


Six Months Ended June 30,


2020


2019


2020


2019

Revenues:








Voyage revenue

$

66,857,166



$

77,430,067



$

153,381,057



$

143,281,414


Charter revenue

3,539,004



5,860,548



12,895,050



19,553,386



70,396,170



83,290,615



166,276,107



162,834,800


Expenses:








Voyage expense

31,757,910



37,224,412



79,553,822



69,398,519


Charter hire expense

15,203,731



18,317,345



47,529,178



43,264,714


Vessel operating expense

9,325,060



11,074,547



19,258,922



20,828,922


General and administrative

3,872,388



5,358,991



7,865,631



9,392,671


Depreciation and amortization

4,345,707



4,491,327



8,587,958



8,868,515


Loss on impairment of vessels

1,801,039





1,801,039




Loss on sale of vessels

297,475





219,485




Total expenses

66,603,310



76,466,622



164,816,035



151,753,341










Income from operations

3,792,860



6,823,993



1,460,072



11,081,459










Other (expense) income:








Interest expense, net

(2,000,550)



(2,101,052)



(4,116,870)



(4,308,220)


Interest expense on related party debt



(11,138)





(38,036)


Unrealized gain (loss) on derivative instruments, net

1,404,317



215,171



(1,512,777)



2,504,957


Other income

98,635



232,092



695,191



399,912


Total other (expense), net

(497,598)



(1,664,927)



(4,934,456)



(1,441,387)










Net income (loss)

3,295,262



5,159,066



(3,474,384)



9,640,072


Income attributable to non-controlling interests

(290,086)



(1,126,565)



(315,815)



(1,905,017)


Net income (loss) attributable to Pangaea Logistics Solutions Ltd.

$

3,005,176



$

4,032,501



$

(3,790,199)



$

7,735,055










Earnings per common share:








Basic

$

0.07



$

0.09



$

(0.09)



$

0.18


Diluted

$

0.07



$

0.09



$

(0.09)



$

0.18










Weighted average shares used to compute earnings per common share:








Basic

43,445,789



42,767,785



43,442,773



42,684,966


Diluted

43,445,789



43,293,022



43,442,773



43,202,187


 

Pangaea Logistics Solutions Ltd.

Consolidated Balance Sheets



June 30, 2020


December 31, 2019


(unaudited)



Assets




Current assets




Cash and cash equivalents

$

46,993,067



$

50,555,091


Restricted cash

1,000,000



1,000,000


Accounts receivable (net of allowance of $1,723,510 and $1,908,841 at June 30, 2020 and December 31, 2019, respectively)

18,197,943



28,309,402


Bunker inventory

11,648,319



21,001,010


Advance hire, prepaid expenses and other current assets

15,575,442



18,770,825


Vessel held for sale

4,563,000



8,319,152


Total current assets

97,977,771



127,955,480






Restricted cash

1,500,000



1,500,000


Fixed assets, net

278,383,059



281,474,857


Investment in newbuildings in-process

15,390,634



15,357,189


Finance lease right of use assets, net

46,259,982



53,615,305


Total assets

$

439,511,446



$

479,902,831






Liabilities and stockholders’ equity




Current liabilities




Accounts payable, accrued expenses and other current liabilities

$

26,528,278



$

39,973,635


Related party debt

242,852



332,987


Deferred revenue

5,343,392



14,376,394


Current portion of secured long-term debt

21,490,674



22,990,674


Current portion of finance lease liabilities

6,927,362



12,549,208


Dividend payable

95,500



631,961


Total current liabilities

60,628,058



90,854,859






Secured long-term debt, net

78,779,452



83,649,717


Finance lease liabilities, net

54,028,493



57,498,217


Long-term liabilities – other

5,108,793



4,828,364


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; 45,065,662 shares issued and outstanding at June 30, 2020; 44,886,122 shares issued and outstanding at December 31, 2019

4,507



4,489


Additional paid-in capital

158,874,237



157,504,895


Retained earnings

8,946,381



12,736,580


Total Pangaea Logistics Solutions Ltd. equity

167,825,125



170,245,964


Non-controlling interests

73,141,525



72,825,710


Total stockholders’ equity

240,966,650



243,071,674


Total liabilities and stockholders’ equity

$

439,511,446



$

479,902,831


 

Pangaea Logistics Solutions Ltd.

Consolidated Statements of Cash Flows

(unaudited)



Six Months Ended June 30,


2020


2019

Operating activities




Net (loss) income

$

(3,474,384)


$

9,640,072

Adjustments to reconcile net income to net cash (used in) provided by operations:




Depreciation and amortization expense

8,587,958


8,868,515

Amortization of deferred financing costs

346,985


365,564

Amortization of prepaid rent

61,136


59,299

Unrealized loss (gain) on derivative instruments

1,512,777


(2,504,957)

Gain from equity method investee

(795,988)


(247,312)

Earnings attributable to non-controlling interest recorded as interest expense

28,166


(Recovery) provision for doubtful accounts

(185,331)


320,491

Loss on impairment of vessels

1,801,039


Loss on sale of vessel

219,485


Drydocking costs

(2,882,109)


(1,545,094)

Share-based compensation

1,523,486


1,045,507

Change in operating assets and liabilities:




Accounts receivable

10,296,790


7,984,657

Bunker inventory

9,352,691


1,775,598

Advance hire, prepaid expenses and other current assets

3,991,371


(1,821,751)

Accounts payable, accrued expenses and other current liabilities

(14,444,003)


1,546,305

Deferred revenue

(9,033,002)


(5,902,610)

Net cash provided by operating activities

6,907,067


19,584,284





Investing activities




Purchase of vessels and vessel improvements

(1,652,366)


(25,557,060)

Investment in newbuildings in-process

(33,445)


(7,657,000)

Purchase of fixed assets and equipment

(7,801)


(281,011)

Proceeds from sale of vessels

8,099,667


Purchase of derivative instrument

(628,000)


Net cash provided by (used in) investing activities

5,778,055


(33,495,071)





Financing activities




Proceeds from long-term debt


14,000,000

Payments of related party debt


(1,691,964)

Payments of financing fees and issuance costs

(149,118)


(277,577)

Payments of long-term debt

(6,568,134)


(12,242,949)

Proceeds from finance leases


13,000,000

Dividends paid to non-controlling interests


(4,666,665)

Payments of finance lease obligations

(9,091,570)


(2,908,693)

Accrued common stock dividends paid

(536,461)


(3,754,985)

Cash paid for incentive compensation shares relinquished

(154,126)


Contributions from non-controlling interest recorded as long-term liability

322,750


Payments to non-controlling interest recorded as long-term liability

(70,487)


Net cash (used in) provided by financing activities

(16,247,146)


1,457,167





Net decrease in cash, cash equivalents and restricted cash

(3,562,024)


(12,453,620)

Cash, cash equivalents and restricted cash at beginning of period

53,055,091


56,114,735

Cash, cash equivalents and restricted cash at end of period

$

49,493,067


$

43,661,115

Supplemental cash flow information




Cash and cash equivalents

$

46,993,067


$

41,161,115

Restricted cash

2,500,000


2,500,000


$

49,493,067


$

43,661,115

 

Pangaea Logistics Solutions Ltd.

Reconciliation of Non-GAAP Measures

(unaudited)




Three Months Ended June 30,


Six Months Ended June 30,



2020


2019


2020


2019

Net Transportation and Service Revenue









Gross Profit


9,781,061



12,218,543



11,409,632



20,545,840


Add:









Vessel Depreciation and Amortization


4,328,408



4,455,768



8,524,553



8,796,805


Net transportation and service revenue


$

14,109,469



$

16,674,311



$

19,934,185



$

29,342,645











Adjusted EBITDA









Income from operations


$

3,792,860



$

6,823,993



$

1,460,072



$

11,081,459


Depreciation and amortization


4,345,707



4,491,327



8,587,958



8,868,515


Loss on impairment of vessels


1,801,039





1,801,039




Loss on sale of vessel


297,475





219,485




Share-based compensation


420,717



370,908



1,523,486



1,045,507


Adjusted EBITDA


$

10,657,798



$

11,686,228



$

13,592,040



$

20,995,481











Earnings Per Common Share









Net income (loss) attributable to Pangaea Logistics Solutions Ltd.


$

3,005,176



$

4,032,501



$

(3,790,199)



$

7,735,055











Weighted average number of common shares outstanding – basic


43,445,789



42,767,785



43,442,773



42,684,966


Weighted average number of common shares outstanding – diluted


43,445,789



43,293,022



43,442,773



43,202,187











Earnings per common share – basic


$

0.07



$

0.09



$

(0.09)



$

0.18


Earnings per common share – diluted


$

0.07



$

0.09



$

(0.09)



$

0.18











Adjusted EPS









Net Income attributable to Pangaea Logistics Solutions Ltd.


$

3,005,176



$

4,032,501



$

(3,790,199)



$

7,735,055


Non-GAAP









Add: loss on sale of vessels


297,475





219,485




Loss on impairment of vessels


1,801,039





1,801,039




Unrealized (gain) loss on derivative instruments


(1,404,317)



(215,171)



1,512,777



(2,504,957)


Non-GAAP adjusted net income (loss) attributable to Pangaea Logistics Solutions Ltd.


$

3,699,373



$

3,817,330



$

(256,898)



$

5,230,098











Weighted average number of common shares – basic


43,445,789



42,767,785



43,442,773



42,684,966


Weighted average number of common shares – diluted


43,445,789



43,293,022



43,442,773



43,202,187











Adjusted EPS – basic


$

0.09



$

0.09



$

(0.01)



$

0.12


Adjusted EPS – diluted


$

0.09



$

0.09



$

(0.01)



$

0.12


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.

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. 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 income or loss from operations before depreciation, amortization and, when applicable, loss on sale and leaseback of vessel, loss on impairment of vessels, stock-based compensation and certain non-recurring charges. 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 Signore


Tiya Gulanikar

Chief Financial Officer


Prosek Partners

401-846-7790


646-818-9288

Investors@pangaeals.com


tgulanikar@prosek.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.