Good morning. My name is Chelsea, and I will be your conference operator today. I would like to welcome everyone to the Pangaea Logistics Solutions First Quarter 2025 Earnings Teleconference. Today's call is being recorded and will be available for replay beginning at 11.00 AM Eastern Standard Time. The recording can be accessed by dialing 888-215-1487 domestically or 402-220-4938 internationally. All lines are currently muted, and after the prepared remarks, there will be a live question-and-answer session. It is now my pleasure to turn the floor over to Stefan Neely with Vallum Advisors.

Thank you, operator, and welcome to the Pangaea Logistics Solutions first quarter 2025 results conference call. Leading the call with me today is CEO, Mark Filanowski; Chief Financial Officer, Gianni Del Signore; and COO, Mads Petersen. Today's discussion contains forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the SEC. Except as required by law, we undertake no obligation to update our forward-looking statements. At the conclusion of our prepared remarks, we will open the line for questions. With that, I'd like to turn the call over to Mark.

Thank you, Stefan, and welcome to those joining us on the call today. After the market closed yesterday, we issued a press release detailing our first quarter 2025 results. Our first quarter performance reflects the continued disciplined execution of our cargo-focused business model. Despite seasonal softness early in the quarter, we delivered TCE rates that were 33% above the prevailing market, demonstrating the strength and differentiation of our commercial strategy. This outperformance was supported by our long-term contracts of affreightment, which provided pricing stability through the winter months and allowed us to effectively manage market volatility later in the quarter. For the first quarter of 2025, we reported an adjusted net loss of approximately $2 million and adjusted EBITDA of $14.8 million as average market pricing declined 37% compared to the prior year period. Despite this pressure, our results benefited from our countercyclical positioning and integrated fleet strategy. Total shipping days rose 24.6% year-over-year, primarily driven by the addition of SSI handy fleet vessels. On a comparable basis, shipping days increased by 41%, underscoring the meaningful contribution of the acquisition to our operational scale. Importantly, we completed 160 days of planned off-hire for vessel dry dockings during the quarter, taking advantage of softer demand to complete a significant portion of our 2025 dry docking schedule. With only four dockings remaining for the rest of the year, we are well-positioned to optimize fleet availability during periods of stronger demand. Since the beginning of the year, our teams have made substantial progress integrating the SSI fleet into our operating platform. Integration efforts are proceeding as planned. And as we fully align the new vessels with our existing routes, we expect to unlock further operating efficiencies and enhance returns across our broader fleet. We have seen vessel operating expenses decrease in areas like insurance, where our larger footprint reduces premiums and allows us to assume some added risks and we are working on other operating cost synergies available as we exchange ideas with new relationships. By year-end, we hope to have implemented cost savings of at least $2.5 million annually. We have successfully expanded the capabilities of the handy fleet, both geographically and cargo-wise. Looking at the market environment, the dry bulk sector continues to experience elevated levels of volatility and uncertainty. While our operations are not directly impacted by proposed tariffs, including recently discussed port fees for Chinese built or controlled vessels, we are closely monitoring potential indirect effects. Based on our review of the revised U.S. trade representative port fees proposal, we do not expect any material impact to our owned fleet given our geographic focus and operating model. However, broader market dislocations could occur as global vessel deployment patterns shift in response to the evolving landscape. It's important to note that over 95% of our tonnage is tied to non-agricultural bulks, including iron ore, coal, cement, and aggregates, primarily across Atlantic, European and Caribbean trade routes. This unique footprint continues to insulate us from some of the demand and policy volatility facing many other dry bulk operators. Turning to the second quarter. Demand trends have remained steady across our key routes, though pricing continues to reflect global macro and trade policy uncertainties. As of today, we have booked 4,275 shipping days for the second quarter, generating a TCE of $12,524 per day. As we advance through 2025, we remain focused on a prudent capital allocation. As we announced yesterday, our Board of Directors has authorized a new share repurchase program of up to $15 million in addition to declaration of a $0.05 dividend. This approach gives us added flexibility to return capital to shareholders through open market repurchases of Pangaea shares, which we feel are undervalued after recent share price movements. In light of the recent pressure on the dry bulk market and ongoing trade uncertainty, we are maintaining a disciplined capital allocation strategy, prioritizing balance sheet strength, while continuing to deliver long-term value through shareholder returns. We will also continue to opportunistically evaluate strategic fleet transactions that support long-term efficiency, extend asset life, and preserve a competitive age profile. At the same time, we are investing in our port and logistics business, which remains a critical contributor to our margin profile. Our expansion at the Port of Tampa is progressing on schedule and new operations in Port Charles, Louisiana, and Port of Aransas in Texas demonstrate our commitment to this exciting supply chain expansion of our business offerings. With that, I'd like to turn the call over to Gianni to review our first quarter financial results.

Thank you, Mark, and welcome to those joining us on the call today. Our first quarter financial results reflect continued TCE outperformance relative to the broader market. First quarter TCE rates were $11,390 per day, a premium of approximately 33% over the average published market rates for Panamax, Supramax and Handysize vessels in the period, driven by strong execution across our core contracts and the expanded scale of our owned fleet. While total shipping days increased year-over-year by 41% to 5,210, TCE rates earned declined by 36%, reflecting the decline in average market year-over-year. Our adjusted EBITDA for the first quarter was $14.8 million, a decrease of approximately $5.2 million relative to the prior year period. Total charter hire expense decreased by 35% year-over-year, primarily due to a 37% decrease in prevailing market rates, partly offset by a 14% increase in chartered-in days. Our charter-in cost on a per day basis was $10,108 in the first quarter of 2025. And through today, we booked approximately 1,795 days at $11,472 per day for the second quarter of 2025. Vessel operating expenses, net of technical management fees, increased by approximately 75% year-over-year, primarily due to the acquisition of the SSI fleet, which increased total owned days by 61% to 3,690. On a per day basis, vessel operating expenses, net of technical management fees, increased by only 4% from an average of $5,300 per day last year to $5,528 per day in the first quarter of 2025. In total, our reported GAAP net loss attributable to Pangaea for the first quarter was approximately $2 million or a loss of $0.03 per diluted share compared to net income of $11.7 million or $0.25 per diluted share in the first quarter of last year. When excluding the impact of the unrealized losses from derivative instruments as well as other non-GAAP adjustments, our reported adjusted net loss attributable to Pangaea during the quarter was $2.1 million or a loss of $0.03 per diluted share compared to adjusted net income of $6.6 million or $0.14 per diluted share in the first quarter of last year. Turning to cash flow and liquidity. Total cash from operations decreased by $13.2 million year-over-year to net cash used in operations of $4.3 million due to a decrease in operating earnings and a $5.2 million increase in dry docking costs year-over-year. We repaid over $11 million in long-term debt and finance lease obligations and our interest expense was $6.1 million, an increase of $2.3 million due to the new debt facilities entered into during the second half of last year and the assumed debt and finance leases associated with the SSI acquisition. We ended the quarter with $63.9 million in cash and total debt including finance lease obligations of approximately $390 million. In the near term, our capital allocation strategy will remain focused on preserving balance sheet optionality, a sustainable shareholder return program along with targeted capital-light investments in our stevedoring and logistics operations and ongoing renewal and modernization of our dry bulk fleet. Additionally, we remain committed to a consistent and sustainable return of capital strategy. With that, we will now open the line for questions.

Our first question will come from Liam Burke with B. Riley Securities. Please go ahead.

Thank you. Good morning, Mark. Good morning, Gianni. Good morning, Mads.

Good morning, Liam.

Mark, you adjusted your strategy for returning cash to shareholders by introducing a buyback. Your dividend is now $0.05 instead of $0.10 per quarter. Do you anticipate maintaining this dividend throughout the cycle, or are you considering transitioning to a more variable model?

We haven't discussed the variable model yet. We've explored various methods to deliver returns to shareholders. I believe the best approach is to reinvest in the business by adding productive personnel and assets. In time, the market will acknowledge the intrinsic value of our operations and shares. However, the market doesn’t always align with my perspective. We have provided substantial dividends over the past few years as a way to return value to shareholders. We’ve also engaged in discussions with shareholders about the merits of a stock buyback. Given the significant decline in share value recently, we decided it was the right moment to initiate a buyback and explore this avenue for returning value to shareholders. With new Directors on the Board, we have fresh insights. Therefore, we will assess the situation over another quarter to see how shares and investors respond to the new dividend rate, and we will take it on a quarter-by-quarter basis going forward.

Great. Thank you. You're still yielding 4.5% even at the new $0.05 per quarter. You called out an expense reduction program by the end of the year. Is that integration savings with the SSI fleet, or is that just ongoing review of the operations and being able to pull out excess costs?

A little bit of both, Liam. We didn't enter the SSI transaction expecting substantial cost savings, but there are some straightforward opportunities to pursue when you have a larger fleet and operation. This scale provides us with more leverage to reduce costs. One area we targeted was insurance, where we looked at protection and indemnity, evaluated hull insurance, and approached the market more aggressively than before, resulting in some cost reductions. We are learning from each other in terms of purchasing and finding other ways to save money, and with a larger fleet and operation, it’s proving effective.

Thank you, Mark.

Thank you. Our next question will come from Poe Fratt with AGP. Please go ahead.

Hey, good morning. Can you just help me, Mark, understand the dividend cut? You've consistently said in previous presentations that you've wanted to maintain a dividend over the cycle that's sustainable. That dividend was $0.10 a quarter. Now you're changing it to $0.05 a quarter. And now you're saying it's sustainable over the cycle. What changed?

A lot has changed, Poe. As I mentioned, our Board's perspective on the feasibility of a share buyback has evolved. We aim to maintain a consistent dividend, although that doesn't imply the same amount every time. Our operations reliably generate cash flow, allowing us to explore various methods to return capital to shareholders. We are focused on responsibly meeting shareholders' need for returns. We identified an opportunity to benefit shareholders by announcing a share buyback. As I indicated, there are multiple ways to provide returns, and we are experimenting with a few different approaches this time.

So can you, Mark, tell me how the share buyback will work? Are you going to be in the market every quarter buying the difference $3.2 million that you're going to save on paying the dividend? A lot of companies announced share buybacks, but never follow through with them. Could you just talk about how you're going to approach the stock buyback?

We're planning to approach at least one bank this week after this call to establish a program. The Board has requested that we discuss any potential share buybacks with them in advance, depending on factors like capital availability. Therefore, it won't be an ongoing program but rather occur when the Board determines it is the appropriate time to buy shares in the market.

Mark, regarding the SSI transaction, you now have a significant shareholder who is also represented on the Board and purchased shares in early April. Are you at all concerned about the increased concentration in ownership? The market often mentions that your public float is limited. Can you discuss how this factored into your decision?

Yes. The $15 million isn't a large share of our outstanding float. We estimate our float to be around 40%. And we think there's an opportunity there to buy shares without decreasing the float substantially. And regarding the concentration of the largest shareholder who now has 28%, there is a cap there of 30% that came about as a result of the negotiations regarding that deal. So I don't think it will go up substantially as a result of any share buyback we might do.

Great. Gianni, in previous quarters, you mentioned your forward cover and that you booked 47 vessels at approximately $12,500. What percentage of your expected shipping days in the second quarter has been booked?

Yes. So I think we gave out the indication so far for the quarter. We had 4,275 days at $12,500. I think our total fleet right now is somewhere around 65 vessels total. And I think that's been right around where we've been for the quarter. So the 65 vessel average fleet over the quarter is our projected total for this quarter.

So you're about 80% booked for the quarter. In previous quarters, Gianni, you mentioned how your chartered hire expenses were performing. Do you have a figure for how many days you've chartered in for the quarter and the associated cost?

Yes, I can. Absolutely. I mentioned earlier that we booked 1,795 days at $11,472. Our margin on our chartered-in fleet is approximately $1,052.

Great. Sorry, I missed that. Mads, can you discuss the operating efficiencies mentioned in the press release regarding the integration of the handies? Beyond the insurance, can you elaborate on any additional operating efficiencies and their nature? Additionally, where do you currently stand with the $2.5 million? Are we a quarter of the way toward realizing that, or will we see the $2.5 million in cost savings over the rest of the year?

Yes. Regarding the trading synergies, they're mainly focused on the commercial aspects, particularly through utilizing handy vessels in trades we've historically done with our Super fleet. This includes geographic trading in areas requiring ice experience or targeting specific commodities. The primary aim is not just cost reduction, but to enhance our top-line growth. While we are certainly mindful of cost optimization, vessel technical management and operations involve numerous components that we continuously review. Access to a larger, more experienced crew pool and additional resources supports our synergy and cost optimization efforts. This is an ongoing process, where some initiatives take longer to implement, but others are being addressed in the shorter term.

Great. On the terminal side, you mentioned the expansion in Tampa and Texas. Could you quantify what that might mean for second half operating results? Will it significantly impact terminaling revenue, or is it just a small addition that could increase revenues by about 10%?

Yes. I think highly dependent on the start date, we're still projecting within this year, late Q3, Q4 start. So it will be incremental to this year. It will add about $150,000 to $200,000 of EBITDA for this year. Really, that's going to be a project that will be in full swing for 2026 in Tampa and then also in Texas, and that's where we'll see the real contribution for that.

And then anything else on the horizon on the terminaling business to further expand?

No, Poe, we'll add the Tampa, Lake Charles and Port Aransas terminals this year. What we found is that once we're in a place, more stuff comes to us. So we have nothing on the books in addition to those three for this year. But once they're up and running, business kind of shows up, additive business.

Great. Thanks for your time.

Thanks, Poe.

Thank you. Our next question will come from Michael Matheson with Sidoti & Company. Please go ahead.

Congratulations on your performance in a difficult quarter.

Thank you, Mike.

I just have a couple of questions. First, in Q1, long-term contracts really helped you out in a difficult TCE environment. What percent of Q2 and onward is already booked on a long-term basis?

Gianni?

Yes. So when we look at the balance of the year, really our contract cover kicks in during ice season, the summer ice season in Q3. So we're heading into that in Q3 and that covers our ice class vessels. And then on average, we've discussed our contract cover on average for the year. And across our owned fleet, it averages around 30%. So when we look over a longer period of time, that's typically the contract cover that we'll have on our fleet and I think that remains true for this year as well.

Okay, great. Looking at uses of cash, we've already talked about dividends versus buybacks. It's clear what your strategy is there. Of course, you're also consistently paying down debt. Can we expect further debt paydowns, or do dividends and share buybacks take priority?

No, I think as far as our debt paydown goes, the $11 million we paid in Q1 is a pretty consistent figure for the next almost two years, up until the end of 2026. Our first significant balloon payment is due in early 2027. I believe we are amortizing debt at a reasonable rate. We have well-priced debt associated with our fixed rate facilities and others that are capped. Therefore, I feel comfortable with our debt payment profile moving forward, and I don’t anticipate pursuing anything substantial until that balloon payment is due.

Great. Well, thank you. And good luck.

Thank you.

Thank you. We do have a follow-up question from Poe Fratt with AGP.

Yes. Gianni, could you just clarify that last comment on the 30% of your capacity is generally sold or committed? Is that 30% of your owned fleet or 30% of what you typically run quarter-to-quarter when you include the chartered-in capacity?

No. When we think about long-term contract cover, it's on the owned fleet. That 30% number is on the owned fleet only. And then the charter-in fleet presents arbitrage opportunities and they're traded to make the owned fleet more efficient, to position vessels appropriately. But when we think about long-term contract cover, that's on the owned fleet is the number we're discussing.

Great. Yes, I just wanted to clarify that. And then, Mark, going back to your prepared remarks, or when you talked about the dividend and the stock buyback, you indicated that your preference is growth. Can you talk about the S&P market right now and how you're viewing the S&P market?

Yes. Second-hand prices are still pretty expensive, Poe, in relation to what the market returns today. So we've held off buying any new ships until that equation gets a little more favorable to owners. So we just added 15 ships at the end of the year. So it's time to sort of catch our breath and wait for the market to make a turn one way or the other.

Great. That's helpful.

Thank you. And at this time, there are no further questions in the queue. So I'd like to turn the call back over to Mark Filanowski for any closing remarks.

Thanks, everyone, for joining us today for interesting times. Flexibility and adaptability are the key to success in this environment and we're pretty good at that. So please feel free to contact us with any further questions at [email protected]. Thanks, again.

Thank you. Ladies and gentlemen, this concludes today's program and we appreciate your participation. You may disconnect at any time.