Pangaea Logistics Solutions Ltd. Reports Record Financial Results for the Quarter Ended June 30, 2022

About this update from Pangaea Logistics Solutions Ltd.

NEWPORT, R.I. , Aug. 9, 2022 /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, 2022 . SECOND QUARTER 2022 RESULTS (As compared to the Second Quarter 2021) Total revenue increased 34% year over year to $195.5 million ; voyage revenue increased 48% year over year Net income attributable to Pangaea increased 30% year over year to $25.0 million , or $0.56 per diluted share Adjusted EBITDA increased 107% year over year to $44.2 million Operating cash flow increased 155% year over year to $37.2 million TCE rates earned by Pangaea increased 29% year over year to $27,139 per day Cash and equivalents increased 152% year over year to $102.2 million For the second quarter ended June 30, 2022 , Pangaea reported net income of $25.0 million , or $0.56 per diluted share, on total revenue of $195.5 million . Second quarter revenue increased by more than 34% on a year-over-year basis, due mainly to a 29% increase in daily Time Charter Equivalent (TCE) rates. Total shipping days, which include both voyage and time charter days, remained essentially flat at 4,703 in the second quarter 2022, versus 4,723 days in the prior-year period, including a 16% increase in voyage days. Vessel operating expenses, net of management fees per day, decreased 1% to $5,198 in the second quarter 2022, versus $5,254 in the prior-year period. The TCE rate was $27,139 per day for the three months ended June 30, 2022 , compared to an average of $21,053 per day for the same period in 2021. During the second quarter 2022, the Company's average TCE rate exceeded the benchmark average Baltic Panamax and Supramax indices by approximately 4%, as supported by Pangaea's long-term contracts of affreightment ("COAs"), specialized fleet and cargo-focused strategy. As of June 30, 2022 , the Company had $102.2 million in cash and equivalents and total debt, including lease finance obligations, of $305 million . At the end of the second quarter 2022, the ratio of net debt to trailing twelve-month adjusted EBITDA was 1.4x. During the first half of 2022, the Company repaid $9.0 million of long-term debt and $7.8 million of finance leases and paid $5.6 million of cash dividends. The Company's Board of Directors declared a quarterly cash dividend of $0.075 per common share, to be paid on September 15, 2022 , to all shareholders of record as of September 1, 2022 . 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 globally, Pangaea also performs stevedoring services, together with port and terminal operations capabilities. During the second quarter, Pangaea's ports and logistics group, along with joint venture partners, performed stevedoring, storage and transfer services in Sabine, Texas for a new customer transporting parts for solar arrays; provided stevedoring services for two vessels in the Mississippi River and contracted several voyages of cargo for a new customer served on the east coast of the U.S. The Company is also actively pursuing new stevedoring opportunities across multiple ports in Texas . Continue to drive strong fleet utilization. Presently, Pangaea's ten ice class 1A panamax and post-panamax vessels are fully deployed and trading in the Arctic under ten-year contracts that utilize approximately 35% of annual available days. This is the first year of full operation of all four post-panamax ships that the Company built specifically for this service, which were delivered in 2021. Continue to upgrade fleet, while divesting of older, non-core assets. In June 2022 , Pangaea completed the renewal of its bauxite shuttle fleet, selling the vessel Bulk Pangaea after taking delivery of the Bulk Concord in the first quarter of 2022. The ships making up this shuttle fleet of three vessels, which continuously serve an important customer's industrial needs, are planned to fulfill the remaining ten years under the customer contract. MANAGEMENT COMMENTARY "Our strong second quarter results demonstrate continued execution on our long-term strategy, one that emphasizes profitable growth within niche, higher-margin dry bulk shipping and logistics markets," stated Mark Filanowski , Chief Executive Officer of Pangaea Logistics Solutions . "We delivered strong year-over-year growth in both revenue and net income while generating record second quarter adjusted EBITDA, driven by a significant year-over-year increase in TCE rates and strong fleet utilization." "At a macro level, global shipping capacity remains constrained, resulting in market rates that remain well above historical averages," continued Filanowski. "We expect global capacity will be further restricted by upcoming IMO emissions requirements coming into effect in January 2023 , which seek to reduce the carbon intensity of the shipping industry. For our part, the Pangaea fleet will be fully compliant ahead of the IMO 2023 mandate, positioning us to maintain a consistent level of performance during the transition. We are studying ways to make our ships even more efficient, opportunities that we expect could drive further improvements in profitability, over time." "Entering what is typically the seasonally strongest quarter of the year for our business, we remain well-positioned to capitalize on favorable market conditions," noted Filanowski. "We will continue to provide both new and existing customers with an exceptional level of service during a period of global supply chain disruption, an approach that keeps our relationships healthy and growing. Our long-term contracting and short-term charter-in strategies have consistently generated profitability over the years. For the third quarter to date, we have booked 3,026 shipping days producing a time charter equivalent of $25,600 /day." "We have a dedicated leadership team and employee base, both ashore and aboard, who drive our performance," continued Filanowski. "Our ability to deploy capital in a prudent, yet opportunistic manner has been integral to our track record of value creation. In what remains a volatile market, we believe a balanced approach to capital deployment is appropriate, one that includes a consistent return of capital program, together with debt reduction and high-return organic growth investments, reflecting our continued confidence in the outlook for our business." SECOND QUARTER 2022 CONFERENCE CALL The Company's management team will host a conference call to discuss the Company's financial results on Wednesday, August 10, 2022 at 8:00 a.m., Eastern Time (ET). To access the teleconference, please dial 800-343-5172 (domestic) or 785-424-1699 (international) approximately ten minutes before the teleconference's scheduled start time and reference Conference ID: PANLQ222. 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 one week following the teleconference and will be accessible by calling 800-938-2490 (domestic) or 402-220-9028 (international). Pangaea Logistics Solutions Ltd. Consolidated Statements of Operations (unaudited) Three Months Ended June 30 , Six Months Ended June 30 , 2022 2021 2022 2021 Revenues: Voyage revenue $ 173,189,073 $ 117,395,377 $ 349,525,824 $ 225,625,680 Charter revenue 22,354,883 28,148,988 37,780,535 44,891,212 Total revenue 195,543,956 145,544,365 387,306,359 270,516,892 Expenses: Voyage expense 67,907,824 46,112,779 133,158,291 93,951,636 Charter hire expense 65,713,016 62,604,014 143,424,623 116,239,356 Vessel operating expense 12,929,700 9,772,966 26,117,533 18,268,469 General and administrative 5,137,387 6,029,793 10,418,775 10,234,691 Depreciation and amortization 7,293,433 4,868,730 14,594,852 9,287,824 Loss on impairment of vessels — — 3,007,809 — Loss on sale of vessels 318,032 — 318,032 — Total expenses 159,299,392 129,388,282 331,039,915 247,981,976 Income from operations 36,244,564 16,156,083 56,266,444 22,534,916 Other income (expense): Interest expense, net (3,634,732) (2,621,110) (7,005,905) (4,577,916) Income attributable to Non-controlling interest recorded aslong-term liability interest expense (1,702,674) (179,080) (3,543,007) (449,745) Unrealized (loss) gain on derivative instruments, net (3,501,649) 6,303,776 3,998,665 8,326,148 Other income (loss) 81,231 (82,496) 218,438 250,962 Total other (expense) income, net (8,757,824) 3,421,090 (6,331,809) 3,549,449 Net income 27,486,740 19,577,173 49,934,635 26,084,365 Income attributable to non-controlling interests (2,454,307) (349,898) (4,734,237) (1,002,919) Net income attributable to Pangaea Logistics Solutions Ltd. $ 25,032,433 $ 19,227,275 $ 45,200,398 $ 25,081,446 Earnings per common share: Basic $ 0.56 $ 0.44 $ 1.02 $ 0.57 Diluted $ 0.56 $ 0.43 $ 1.00 $ 0.56 Weighted average shares used to compute earnings percommon share: Basic 44,430,487 43,998,424 44,411,025 43,989,515 Diluted 45,070,533 44,688,602 45,129,077 44,731,058 Pangaea Logistics Solutions Ltd. Consolidated Balance Sheets June 30, 2022 December 31, 2021 (unaudited) Assets Current assets Cash and cash equivalents $ 102,175,390 $ 56,208,902 Accounts receivable (net of allowance of $2,509,255 and $1,990,459 at June 30, 2022 and December 31, 2021 , respectively) 41,100,379 54,259,265 Bunker inventory 52,823,684 27,147,760 Advance hire, prepaid expenses and other current assets 38,063,875 46,347,687 Total current assets 234,163,328 183,963,614 Fixed assets, net 469,965,208 471,912,810 Advances for vessel purchases — 1,990,000 Finance lease right of use assets, net 46,296,661 45,195,759 Other non-current Assets 4,198,766 3,961,823 Total assets $ 754,623,963 $ 707,024,006 Liabilities and stockholders' equity Current liabilities Accounts payable, accrued expenses and other current liabilities $ 65,304,630 $ 49,154,439 Related party debt — 242,852 Deferred revenue 24,346,521 32,205,312 Current portion of secured long-term debt 12,891,501 15,443,115 Current portion of finance lease liabilities 16,153,750 14,479,803 Dividend payable 197,741 213,765 Total current liabilities 118,894,143 111,739,286 Secured long-term debt, net 99,587,978 105,836,797 Finance lease liabilities, net 176,437,981 170,959,553 Long-term liabilities - other 18,849,983 17,806,976 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; 46,006,182 shares issued and outstanding at June 30, 2022 ; 45,617,840 shares issued and outstanding at December 31, 2021 4,599 4,562 Additional paid-in capital 162,385,398 161,534,280 Retained earnings 125,250,467 85,663,375 Total Pangaea Logistics Solutions Ltd. equity 287,640,464 247,202,217 Non-controlling interests 53,213,414 53,479,177 Total stockholders' equity 340,853,878 300,681,394 Total liabilities and stockholders' equity $ 754,623,963 $ 707,024,006 Pangaea Logistics Solutions Ltd. Consolidated Statements of Cash Flows Six Months Ended June 30 , 2022 2021 Operating activities Unaudited Unaudited Net income $ 49,934,635 $ 26,084,365 Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization expense 14,594,852 9,287,824 Amortization of deferred financing costs 499,703 477,263 Amortization of prepaid rent 60,969 57,628 Unrealized gain on derivative instruments (3,998,665) (8,326,148) Income from equity method investee (218,438) (250,962) Earnings attributable to non-controlling interest recorded as other long term liability 3,543,007 449,745 Provision for doubtful accounts 518,796 285,466 Loss on impairment of vessels 3,007,809 — Loss on sale of vessel 318,032 — Drydocking costs (4,858,510) (5,551,513) Share-based compensation 1,138,785 1,365,734 Change in operating assets and liabilities: Accounts receivable 12,640,090 (1,894,649) Bunker inventory (25,675,924) (7,217,311) Advance hire, prepaid expenses and other current assets 12,286,477 (10,482,310) Accounts payable, accrued expenses and other current liabilities 13,292,238 12,222,358 Deferred revenue (7,858,791) 3,026,377 Net cash provided by operating activities 69,225,065 19,533,867 Investing activities Purchase of vessels and vessel improvements (18,501,875) (108,540,199) Purchase of fixed assets and equipment (71,416) (112,196) Contribution to non-consolidated subsidiaries (18,505) — Proceeds from sale of vessels 8,400,000 — Net cash used in investing activities (10,191,796) (108,652,395) Financing activities Proceeds from long-term debt — 66,350,000 Payments of financing fees and issuance costs (331,317) (1,167,783) Payments of long-term debt (9,010,117) (55,620,110) Proceeds from finance leases 15,000,000 77,084,500 Payments of finance lease obligations (7,808,388) (3,824,259) Dividends paid to non-controlling interests (5,000,000) (3,333,334) Accrued common stock dividends paid (5,629,329) (2,449,741) Cash paid for incentive compensation shares relinquished (287,630) (129,190) Contributions from non-controlling interest recorded as long-term liability — 4,621,398 Payments to non-controlling interest recorded as long-term liability — (195,597) Net cash (used in) provided by financing activities (13,066,781) 81,335,884 Net increase (decrease) in cash and cash equivalents 45,966,488 (7,782,644) Cash and cash equivalents at beginning of period 56,208,902 48,397,216 Cash and cash equivalents at end of period $ 102,175,390 $ 40,614,572 Pangaea Logistics Solutions Ltd. Reconciliation of Non-GAAP Measures (unaudited) Three Months Ended June 30 , Six Months Ended June 30 , 2022 2021 2022 2021 Net Transportation and Service Revenue Gross Profit $ 41,699,983 $ 22,204,290 $ 70,011,060 $ 32,857,308 Add: Vessel Depreciation and Amortization 7,293,433 4,850,316 14,594,852 9,200,123 Net transportation and service revenue $ 48,993,416 $ 27,054,606 $ 84,605,912 $ 42,057,431 Adjusted EBITDA Net Income 27,486,740 19,577,173 49,934,635 26,084,365 Interest expense, net 5,337,406 2,800,190 10,548,912 5,027,661 Depreciation and amortization 7,293,433 4,868,730 14,594,852 9,287,824 EBITDA 40,117,579 27,246,093 75,078,399 40,399,850 Non-GAAP Adjustments: Loss on impairment of vessels — — 3,007,809 — Loss on sale of vessels 318,032 — 318,032 — Share-based compensation 310,979 418,182 1,138,785 1,365,734 Unrealized gain on derivative instruments, net 3,501,649 (6,303,776) (3,998,665) (8,326,148) Adjusted EBITDA $ 44,248,239 $ 21,360,499 $ 75,544,360 $ 33,439,436 Earnings Per Common Share Net income attributable to Pangaea Logistics Solutions Ltd. $ 25,032,433 $ 19,227,275 $ 45,200,398 $ 25,081,446 Weighted average number of common shares outstanding - basic 44,430,487 43,998,424 44,411,025 43,989,515 Weighted average number of common shares outstanding - diluted 45,070,533 44,688,602 45,129,077 44,731,058 Earnings per common share - basic $ 0.56 $ 0.44 $ 1.02 $ 0.57 Earnings per common share - diluted $ 0.56 $ 0.43 $ 1.00 $ 0.56 Adjusted EPS Net Income attributable to Pangaea Logistics Solutions Ltd. $ 25,032,433 $ 19,227,275 $ 45,200,398 $ 25,081,446 Non-GAAP Add: loss on impairment of vessels — — 3,007,809 — Loss on impairment of vessels 318,032 — 318,032 — Unrealized gain on derivative instruments 3,501,649 (6,303,776) (3,998,665) (8,326,148) Non-GAAP adjusted net income attributable to Pangaea Logistics Solutions Ltd. $ 28,852,114 $ 12,923,499 $ 44,527,574 $ 16,755,298 Weighted average number of common shares - basic 44,430,487 43,998,424 44,411,025 43,989,515 Weighted average number of common shares - diluted 45,070,533 44,688,602 45,129,077 44,731,058 Adjusted EPS - basic $ 0.65 $ 0.29 $ 1.00 $ 0.38 Adjusted EPS - diluted $ 0.64 $ 0.29 $ 0.99 $ 0.37 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. 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, income taxes, depreciation and amortization, loss on impairment, loss on sale and leaseback of vessels, share-based compensation and other non-operating income and/or expense, 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 Signore Emily Blum Chief Financial Officer Prosek Partners 401-846-7790 973-464-5240 [email protected] [email protected] 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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