U.S. markets open in 3 hours 13 minutes

Pangaea Logistics Solutions Ltd. Reports Financial Results for the Three Months and Year Ended December 31, 2019

NEWPORT, R.I., March 23, 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 and year ended December 31, 2019.

Pangaea Logistics Solutions Ltd. (PRNewsfoto/Pangaea Logistics Solutions Ltd.)

2019 Highlights

  • Net income attributable to Pangaea Logistics Solutions Ltd. of $11.7 million, as compared to $17.8 million for the year ended December 31, 2018.
  • Earnings per share of $0.27 as compared to $0.42 for the year ended December 31, 2018.
  • Cash flow from operations of $44.5 million, compared to $40.1 million for the prior year.
  • Pangaea's TCE rates increased 1% to $14,199 from $14,019 in 2018 while the market average for the year was approximately $10,093 per day, a premium over the market of approximately 41%.
  • Adjusted EBITDA of $51.1 million for the year ended December 31, 2019.
  • At December 31, 2019, Pangaea had $53.1 million in cash, restricted cash and cash equivalents.

4th Quarter 2019 Highlights           

  • Net loss of $4.4 million, which includes total losses on impairment and sale of vessels of $9.3 million, as compared to a net loss of $0.6 million in the same period of 2018.
  • Pangaea's TCE rates increased 6% to $15,172 per day for the three months ended December 31, 2019 a premium over the market average of approximately 40%.
  • Adjusted EBITDA of $13.5 million for the fourth quarter of 2019 versus $12.2 million for the same period in 2018.
  • Net transportation and service revenue was $18.7 million in the three months ended December 31, 2018 as compared to $16.4 million in the comparable period.

Ed Coll, Pangaea's Chief Executive Officer, commented;

"We were extremely active in 2019, a year that started and ended with a challenging dry bulk charter market. Despite this environment, we continued to operate profitably. Our $18.2 million of adjusted Net Income and $51.1 million of adjusted EBITDA, adjusted for book losses on sale and impairments, is another strong result for our Company. Our vessel activity increased substantially in the third and fourth quarters, which is traditionally our busiest time of the year. Our premiums were 41% above average market levels for 2019, continuing our industry leading performance. We also pushed forward core strategic initiatives such as our fleet renewal efforts and port logistics. We ordered four new ice class vessels in 2019 to complement our high ice class fleet of vessels that are capable of performing demanding Arctic service, and we built a temporary port and performed a test shipment of valuable ore from Greenland, less than 1,000 miles from the North Pole."

Mr. Coll added, "During the year we purchased some young secondhand vessels and, at the end of the year, we took further steps to renew our fleet by selling some older vessels, putting us in a position to renew when opportunities arise. Strong cash operating income allowed total cash to stay above $50 million at year end, despite aggressive debt amortization, the purchase of new vessels, substantial newbuilding deposits, and payment of dividends to our shareholders. Our plan to reach ashore for cargo-related contract work is moving forward, with the Brayton Point Terminal now in operation, and our stevedoring operations in the Mississippi River started on December 31, 2019.  Other logistics projects are in our pipeline as we demonstrate our expertise in handling difficult challenges related to cargo movements. Collectively these efforts solidify our position and we stand ready to expand when opportunities arise."

Results for the three months and year ended December 31, 2019

Total revenue was $130.5 million for the three months ended December 31, 2019, compared with $101.8 million for the three months ended December 31, 2018. The total number of shipping days performed increased by 22% to 5,240, compared to 4,287 days during the fourth quarter of 2018 predominantly due to the increase in voyage days.

The average TCE rate achieved was $15,172 per day for the three months ended December 31, 2019, compared to an average of $14,360 per day for the same period in 2018. The achieved premium over the average market increased to $4,353 per day or 40% for the three months ended December 31, 2019.

Total revenue was $412.2 million for the year ended December 31, 2019, compared with $373.0 million for the year ended December 31, 2018. The Company reported net income of $11.7 million or $0.27 per common share compared to net income of 17.8 million, or $0.42 per common share for the previous year. This decrease was largely driven by book loss on sale of vessels and impairments recognized in 2019. Adjusted net income was $18.2 million for 2019 compared to $22.5 million for 2018.

The average TCE rate achieved was $14,199 per day for the year ended December 31, 2019, compared to an average of $14,019 per day for the year ended December 31, 2018. The Baltic Dry Index ("BDI"), a measure of dry bulk market performance, averaged 1,329 for 2019, down from an average of 1,345 for 2018. The Company's average TCE rates increased 1% in 2019 over the average for 2018, and exceeded the published market rates by an average of 41% over the two year period.

Liquidity and Cash Flows

Cash, cash equivalents and restricted cash were $53.1 million as of December 31, 2019, compared to $56.1 million on December 31, 2018.

At December 31, 2019 and December 31, 2018, the Company had working capital of $36.1 million and $34.5 million, respectively. For the twelve months end December 31, 2019, the Company's net cash provided by operating activities was $44.5 million, compared to $40.1 million for the twelve months ended December 31, 2018.

For the twelve months ended December 31, 2019 and 2018, net cash used in investing activities was $46.6 million and $17.5 million, respectively. For the twelve months ended December 31, 2019 and 2018, net cash used in financing activities was $0.9 million and was $5.0 million, respectively. These changes reflect the Company's investment in newbuilding vessels, and the purchase of second hand vessels, including the m/v Bulk Spirit and m/v Bulk Friendship which were financed under the finance lease arrangements and the m/v Bulk Independence which was financed under a commercial loan facility. The financing activities also include a dividend paid to our joint venture partners of $4.7 million and dividends paid to the common stockholders of $8.1 million.

Subsequent Event

On March 20, 2020, due to the unprecedented and uncertain conditions caused by the coronavirus (COVID-19) global pandemic, and the potential impact responses might have on the Company's short term earnings and cash flow, the Board of Pangaea Logistics Solutions Ltd., as a precautionary measure, will not declare and pay a dividend for the first quarter of 2020. The Board will continue to consider a dividend on a quarterly basis as negative impacts of the global pandemic on the Company's operations are more clearly assessed and risks are addressed or dissipate. Separately, the Board authorized a stock repurchase plan which allows for the purchase of up to $3.0 million of its common stock through December 31, 2020. The timing and number of shares repurchased under the program, if any, will be at the sole discretion of the Company subject to certain conditions approved by the board of directors.

Conference Call Details

The Company's management team will host a conference call to discuss the Company's financial results on March 24, 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# 9578734.

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 (800) 585-8367 (domestic) or (404) 537-3406 (international) and referencing ID# 9578734.

 


Pangaea Logistics Solutions Ltd.
Consolidated Statements of Operation



Three months ended December 31,


Twelve months ended December 31,


2019


2018


2019


2018


(unaudited)


(unaudited)





Revenues:








Voyage revenue

$

118,627,059



$

85,773,670



$

365,714,864



$

319,753,056


Charter revenue

11,850,564



16,055,369



46,482,955



53,217,317


Total revenue

130,477,623



101,829,039



412,197,819



372,970,373










Expenses:








Voyage expense

50,977,508



40,265,848



165,478,629



145,146,359


Charter hire expense

47,705,639



35,045,423



132,950,418



116,958,024


Vessel operating expenses

13,105,772



10,070,292



45,266,464



39,830,110


General and administrative

5,217,757



4,272,662



17,378,681



16,483,991


Depreciation and amortization

5,008,398



4,480,491



18,529,476



17,620,725


Loss on impairment of vessels

4,751,143





4,751,143




   Loss on sale of vessels

4,584,796





4,584,796




   Loss on sale and leaseback of vessels







860,426


Total expenses

131,351,013



94,134,716



388,939,607



336,899,635










(Loss)/income from operations

(873,390)



7,694,323



23,258,212



36,070,738










Other (expense) income:








Interest expense, net

(2,419,947)



(2,310,167)



(9,227,784)



(8,694,481)


Interest expense, related party

(1,303)



(41,414)



(50,241)



(202,748)


Unrealized gain/(loss) on derivative instruments

549,935



(4,346,456)



2,753,834



(3,868,948)


Other (expense)/income

(265,259)



180,272



314,847



677,085


Total other expense, net

(2,136,574)



(6,517,765)



(6,209,344)



(12,089,092)










Net (loss)/income

(3,009,964)



1,176,558



17,048,868



23,981,646


Income attributable to noncontrolling interests

(1,388,693)



(1,794,506)



(5,390,910)



(6,224,626)


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

$

(4,398,657)



$

(617,948)



$

11,657,958



$

17,757,020










Earnings per common share:








Basic

$

(0.10)



$

(0.01)



$

0.27



$

0.42


Diluted

$



$



$

0.27



$

0.42










Weighted average shares used to compute earnings per common share








Basic

42,819,589



42,369,661



42,752,413



42,248,776


Diluted

42,819,589



42,369,661



43,267,178



42,783,586


 

 


Pangaea Logistics Solutions Ltd.
Consolidated Balance Sheets



December 31, 2019


December 31, 2018

Assets




Current Assets




Cash and cash equivalents

$

50,555,091



$

53,614,735


Accounts receivable (net of allowance of $1,908,841 and $2,357,130 at December 31, 2019 and 2018, respectively)

28,309,402



28,481,787


Bunker inventory

21,001,010



19,222,087


Advance hire, prepaid expenses and other current assets

18,770,825



12,187,551


Vessels held for sale, net

8,319,152




Total current assets

126,955,480



113,506,160






Restricted cash

2,500,000



2,500,000


Fixed assets, net

281,474,857



281,891,685


Investment in newbuildings in-process

15,357,189




Finance lease right of use assets, net

53,615,305



55,576,777


Total assets

$

479,902,831



$

453,474,622






Liabilities and stockholders' equity




Current liabilities




Accounts payable, accrued expenses and other current liabilities

$

39,973,635



$

31,897,507


Related party notes payable

332,987



2,877,746


Deferred revenue

14,376,394



14,717,072


Current portion of long-term debt

22,990,674



20,127,742


Current portion of finance lease liabilities

12,549,208



5,364,963


Dividends payable

631,961



4,063,598


Total current liabilities

90,854,859



79,048,628






Secured long-term debt, net

83,649,717



95,374,270


Finance lease liabilities

57,498,217



45,684,727


Long-term liabilities - other

4,828,364








Stockholders' equity:




Preferred stock, $0.0001 par value, 1,000,000 shares authorized and no share issued or outstanding




Common stock, $0.0001 par value, 100,000,000 shares authorized, 44,886,122 and 43,998,560 shares issued and outstanding at December 31, 2019 and 2018, respectively

4,489



4,400


Additional paid-in capital

157,504,895



155,946,452


Retained Earnings

12,736,580



5,737,199


Total Pangaea Logistics Solutions Ltd. equity

170,245,964



161,688,051


Non-controlling interests

72,825,710



71,678,946


Total stockholders' equity

243,071,674



233,366,997


Total liabilities and stockholders' equity

$

479,902,831



$

453,474,622



 

 

Pangaea Logistics Solutions Ltd.
Consolidated Statements of Cash Flows



Years ended December 31,


2019


2018

Operating activities




Net income

$

17,048,868



$

23,981,646


Adjustments to reconcile net income to net cash provided by operations:




Depreciation and amortization expense

18,529,476



17,620,725


Amortization of deferred financing costs

727,020



693,788


Amortization of prepaid rent

118,597



121,937


Unrealized (gain)/loss on derivative instruments

(2,753,834)



3,868,948


Income from equity method investee

(156,137)



(224,001)


Earnings attributable to noncontrolling interest recorded as interest expense

44,950




Provision for doubtful accounts

898,357



268,990


Loss on impairment of vessels

4,751,143




Loss on sales of vessels

4,584,796




Loss on sales and leaseback of vessels



860,426


Drydocking costs

(1,633,771)



(2,135,670)


Recognized cost for restricted stock issued as compensation

1,737,315



1,200,214


Change in operating assets and liabilities:




Accounts receivable

(725,972)



(7,661,352)


Bunker inventory

(2,425,497)



(3,865,375)


Advance hire, prepaid expenses and other current assets

(6,247,268)



1,624,441


Accounts payable, accrued expenses and other current liabilities

10,301,367



(392,160)


Deferred revenue

(340,678)



4,172,392


Net cash provided by operating activities

44,458,732



40,134,949






Investing activities




Purchase of vessels and vessel improvements

(41,350,536)



(17,126,213)


Proceeds from sale of vessels

10,388,723




Deposits on newbuildings in-process

(15,357,189)




Purchase of building and equipment

(283,244)



(414,922)


Proceeds from sale of equipment



31,594


Net cash used in investing activities

(46,602,246)



(17,509,541)






Financing activities




Proceeds of related party debt




Payments on related party notes payable

(2,595,000)



(4,131,851)


Proceeds from long-term debt

14,000,000




Payments of financing and issuance costs

(2,960,899)



(728,041)


Payments of long-term debt

(20,627,742)



(21,058,742)


Proceeds from finance leases

25,600,000



27,750,000


Payments on finance lease obligation

(6,602,265)



(3,501,589)


Dividends paid to non-controlling interests

(4,666,665)



(904,803)


Common stock accrued dividends paid

(8,090,213)



(2,270,000)


Cash paid for incentive compensation shares relinquished

(179,279)



(146,647)


Contributions from noncontrolling interests recorded as long-term liability

4,783,414




Proceeds from private placement of common stock, net of issuance costs



(50,812)


Net cash used in financing activities

(916,130)



(5,042,485)






Net (decrease)/increase in cash, cash equivalents and restricted cash

(3,059,644)



17,582,923


Cash, cash equivalents and restricted cash at beginning of period

56,114,735



38,531,812


Cash, cash equivalents and restricted cash at end of period

$

53,055,091



$

56,114,735






Supplemental cash flow items:




Cash paid for interest

 

$

9,250,743



$

8,636,458


 

 

 

Pangaea Logistics Solutions Ltd.
Reconciliation of Non-GAAP Measures



For the three months ended


For the twelve months ended


December 31, 2019


December 31, 2018


December 31, 2019


December 31, 2018


(unaudited)


(unaudited)





Net Transportation and Service Revenue (1)








Gross Profit

$

13,712,008



$

11,996,943



$

50,107,841



$

53,527,602


Add:








Vessel Depreciation and amortization

4,976,696



4,450,533



18,394,467



17,508,278


Net transportation and service revenue

$

18,688,704



$

16,447,476



$

68,502,308



$

71,035,880










Adjusted EBITDA (in millions)








(Loss)/income from operations

$

(873,390)



$

7,694,323



$

23,258,212



$

36,070,738


Depreciation and amortization

5,008,398



4,480,491



18,529,476



17,620,725


Loss on impairment of vessels

4,751,143





4,751,143




Loss on sale of vessels

4,584,796





4,584,796




Loss on sale and leaseback of vessel







860,426


Adjusted EBITDA

$

13,470,947



$

12,174,814



$

51,123,627



$

54,551,889










Earnings Per Common Share








Net (loss)/Income attributable to Pangaea Logistics Solutions Ltd.

$

(4,398,657)



$

(617,948)



$

11,657,958



$

17,757,020










Weighted average number of common shares - basic

42,819,589



42,369,661



42,752,413



42,248,776


Weighted average number of common shares - diluted

42,819,589



42,369,661



43,267,178



42,783,586










Earnings per common share - basic

$

(0.10)



$

(0.01)



$

0.27



$

0.42


Earnings per common share - diluted

$



$



$

0.27



$

0.42










Adjusted EPS








Net Income attributable to Pangaea Logistics Solutions Ltd.

$

(4,398,657)



$

(617,948)



$

11,657,958



$

17,757,020


Non-GAAP








Add:








Loss on impairment of vessels

4,751,143





4,751,143




Loss on sale of vessels

4,584,796





4,584,796




Loss on sale and leaseback of vessels







860,426


Unrealized gain/(loss) on derivative instruments

549,935



(4,346,456)



2,753,834



(3,868,948)


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

$

4,387,347



$

3,728,508



$

18,240,063



$

22,486,394










Weighted average number of common shares - basic

42,819,589



42,369,661



42,752,413



42,248,776


Weighted average number of common shares - diluted

42,819,589



42,369,661



43,267,178



42,783,586










Adjusted EPS - basic

$

0.10



$

0.09



$

0.43



$

0.53


Adjusted EPS - diluted

$

0.10



$

0.09



$

0.42



$

0.53


 

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, non-GAAP adjusted EBITDA and non-GAAP Adjusted EPS. These are considered non-GAAP financial measures 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 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 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

Sean Silva


Tiya Gulanikar

Prosek Partners


Prosek Partners

646-818-9122


646-818-9288

ssilva@prosek.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.

Cision

View original content to download multimedia:http://www.prnewswire.com/news-releases/pangaea-logistics-solutions-ltd-reports-financial-results-for-the-three-months-and-year-ended-december-31-2019-301028481.html

SOURCE Pangaea Logistics Solutions Ltd.