PANL 8-K
Pangaea Logistics Solutions Ltd. (PANL)
8-K
2021-03-15
For: 2021-03-15
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Added on
April 09, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 15, 2021
(Exact Name of Registrant as Specified in Charter)
| (State or Other Jurisdiction | (Commission | (IRS Employer | ||||||
| of Incorporation) | File Number) | Identification No.) | ||||||
c/o Phoenix Bulk Carriers (US) LLC
(Address of Principal Executive Offices) (Zip Code)
(401 ) 846-7790
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||||||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||||||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||||||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e 4(c)) | ||||||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition. | ||||
On March 15, 2021 , Registrant issued a press release announcing financial results for the three and twelve months ended December 31, 2020 and 2019. The press release is furnished as Exhibit 99.1, its Quarterly Investor Presentation is attached as Exhibit 99.2.
The information contained in, or incorporated into, this Current Report on Form 8-K is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities under that section, nor shall it be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in any such filing.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. | ||||
On March 10, 2021, Paul Hong and Nam Trinh notified the Board of Pangaea Logistics Solutions Ltd. (the “Company”) of their decisions to resign, effective immediately, from their positions as members of the Board. Mr. Hong and Mr. Trinh's resignations did not result from any disagreements with management or the Board.
| Item 9.01 | Financial Statements and Exhibits. | ||||
(d)Exhibits
| Exhibit | Description | ||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: March 15, 2021
| PANGAEA LOGISTICS SOLUTIONS LTD. | ||||||||
| By: | /s/ Gianni Del Signore | |||||||
| Name: Gianni Del Signore Title: Chief Financial Officer | ||||||||
Pangaea Logistics Solutions Ltd. Reports Financial Results for the
Three Months and Year Ended December 31, 2020 and Change in Composition of its Board of Directors
NEWPORT, RI - March 15, 2021 - 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, 2020.
4th Quarter 2020 Highlights
•Net income of $7.6 million, as compared to a net loss of $4.4 million in the same period of 2019.
◦Non-GAAP adjusted net income attributable to Pangaea Logistics Solutions Ltd. of $6.2 million, as compared to $4.4 million for the same period of 2019.
◦Adjusted Earnings per share of $0.14, as compared to $0.10 for the same period of 2019.
•Pangaea's TCE rates decreased 4% to $14,640 per day for the three months ended December 31, 2020, a premium over the market average of approximately 42%.
•Adjusted EBITDA of $12.9 million for the fourth quarter of 2020 versus $13.8 million for the same period in 2019.
•Net transportation and service revenue was $16.9 million in the three months ended December 31, 2020 as compared to $18.7 million in the comparable period.
2020 Highlights
•Net income attributable to Pangaea Logistics Solutions Ltd. of $11.4 million, as compared to $11.7 million for the year ended December 31, 2019,
◦Non-GAAP adjusted Net Income attributable to Pangaea Logistics Solutions Ltd. of $14.0 million, as compared to $18.2 million for the year ended December 31, 2019.
•Earnings per share of $0.26 as compared to $0.27 for the year ended December 31, 2019.
◦Adjusted earnings per share of $0.32, as compared to $0.43 for the year ended December 31, 2019
•Cash flow from operations of $20.8 million, compared to $44.5 million for the prior year.
•Pangaea's TCE rates decreased 12% to $12,433 from $14,199 in 2019 while the market average for the year of 2020 was approximately $8,020 per day, a premium over the market of approximately 55%.
•Adjusted EBITDA of $41.6 million for the year ended December 31, 2020.
•At December 31, 2020, Pangaea had $48.4 million in cash, restricted cash and cash equivalents.
•The Company acquired an additional one-third equity interest in its partially-owned consolidated subsidiary Nordic Bulk Holding Company Ltd., which owns six modern 1-A ice-class panamax bulk vessels, increasing its equity interest to 66.7%.
Ed Coll, Pangaea's Chief Executive Officer, commented;
"Against a challenging backdrop, we remained extremely active and continued to operate profitably with full year net income of $11.4 million and EPS of $0.26. In addition to keeping the Company's base business moving, we worked hard on strategic opportunities: expanding our terminal services business, renewing our fleet, and solidifying our position in our ice class niche by increasing our ownership in our six ice-class 1A panamax vessels from 33% to 67%. Further, we solidified our balance sheet by refinancing upcoming balloons on our six ice-class 1A panamax vessels, and our newbuilding ice class vessel program is continuing to progress with the first vessel launched in early February. I am especially proud of our entire team this year, both on shore and on our vessels. Their performance to keep the company moving forward, against the challenges of the COVID-19 global pandemic is remarkable and their efforts to work as a team to adjust to rigorous safety standards and still perform with best in class results, is sincerely appreciated."
Mr. Coll added, "Collectively we are encouraged by the steps we've taken to expand our platform in ways that add value for our customers and, in turn, to enhance shareholder value. As we look ahead, the coming year appears to be bright for dry bulk shipping and for us. We hope as the COVID-19 threat is mitigated the world economy will quickly recover, increasing demand for dry bulk capacity. Simultaneously, we continue to see restraint in newbuilding orders which should have a long term positive impact on the dry bulk industry. The first quarter of 2021 rates have been a welcome surprise to many, and perhaps an indication for the year ahead."
Results for the three months and year ended December 31, 2020
Total revenue was $112.9 million for the three months ended December 31, 2020, compared with $130.5 million for the three months ended December 31, 2019. The total number of shipping days performed decreased by 7% to 4,867, compared to 5,240 days during the fourth quarter of 2019 predominantly due to the decrease in voyage days.
The average TCE rate achieved was $14,640 per day for the three months ended December 31, 2020, compared to an average of $15,172 per day for the same period in 2019. The achieved premium over the average market increased to $4,314 per day or 42% for the three months ended December 31, 2020.
Total revenue was $382.9 million for the year ended December 31, 2020, compared with $412.2 million for the year ended December 31, 2019. The Company reported net income of $7.6 million or $0.17 per common share compared to net income of $11.4 million, or $0.26 per common share for the previous year. Adjusted net income was $14.0 million for 2020 compared to $18.2 million for 2019.
The average TCE rate achieved was $12,433 per day for the year ended December 31, 2020, compared to an average of $14,199 per day for the year ended December 31, 2019. The Baltic Dry Index (“BDI”), a measure of dry bulk market performance, averaged 1,085 for 2020, down from an average of 1,329 for 2019. The Company's average TCE rates decreased 12.2% in 2020 over the average for 2019, however they exceeded the published market rates by an average of 45% over the two year period.
Liquidity and Cash Flows
Cash, cash equivalents and restricted cash were $48.4 million as of December 31, 2020, compared to $53.1 million on December 31, 2019.
At December 31, 2020 and December 31, 2019, the Company had working capital of $2.2 million and $37.1 million, respectively. The significant reduction in working capital is the result of balloon payments on the Bulk Nordic Odin Ltd., Bulk Nordic Olympic Ltd., Bulk Nordic Oshima Ltd., and Bulk Nordic Oasis Ltd. Loan Agreements that are due and payable in October 2021. However, on March 8, 2021, the Company obtained a commitment letter from its lenders for a new six year $53 million senior secured term loan facility. The proceeds from the new senior secured loan will be used to refinance in full the balloon amounts on the Bulk Nordic Odin Ltd., Bulk Nordic Olympic Ltd., Bulk Nordic Oshima Ltd. and Bulk Nordic Oasis Ltd. Loan Agreements which is expected to be completed within March of 2021.
For the twelve months end December 31, 2020, the Company’s net cash provided by operating activities was $20.8 million, compared to $44.5 million for the twelve months ended December 31, 2019.
For the twelve months ended December 31, 2020 and 2019, net cash used in investing activities was $6.9 million and $46.6 million, respectively. These changes reflect the Company’s purchase of an additional one-third equity interest in its partially-owned consolidated subsidiary Nordic Bulk Holding Company Ltd. and sales of three vessels.
Net cash used in financing activities was $18.6 million for 2020, which consists of $18.0 million of proceeds from secured credit facilities; repayments of $23.0 million on credit facilities and repayments of $12.5 million on financing arrangements. Net cash used in financing activities was $0.9 million for 2019, which consists of $14.0 million of proceeds from secured credit facilities and $25.6 million of proceeds from financing arrangements; $3.0 million payments of financing fees; $2.6 million of repayments of related party debt; $20.6 million repayments of credit facilities and repayments of $6.6 million on financing arrangements; $8.1 million of dividends paid on common stock and $4.7 million of dividends paid on non-controlling interests; the Company received $5.2 million from the non-controlling interest contribution.
Company Update
The Company announced it has received the resignations of two directors from its Board of Directors ("Board). Nam Trinh and Paul Hong, both long associated with the Company, have resigned effective March 10, 2021. The vacant seats will not be filled by the Board at the present time. Both Mr. Trinh and Mr. Hong are employees of Cartesian Capital Group.
Ed Coll, Pangaea's Chief Executive Officer, commented; “We have known Cartesian, and Paul and Nam, since they first invested with us in 2008, well before our public listing in 2014. It has been an extraordinary relationship with their active involvement and support in all aspects of our business. Cartesian committed time, ideas, and capital to make Pangaea a leader in our industry, and a consistently profitable enterprise. We will miss their energy in leading us forward, their curiosity in constructively interrogating our plans, and their ideals, which we will try to emulate.” Mr. Coll added, “At this time, we will not replace the open board positions and our board will consist of seven highly qualified directors.”
Peter Yu, Managing Director of Cartesian Capital Group, commented; "Under Ed's leadership, the Company not only weathered but thrived during 2020, maintaining profitability despite a global pandemic, expanding its distinctive ice business, and delivering for its clients around the world. Pangaea starts 2021 well-positioned and poised for growth thanks to the tireless efforts of Ed and his entire team."
Conference Call Details
The Company’s management team will host a conference call to discuss the Company’s financial results on March 16, 2021 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# 5197869.
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# 5197869.
Pangaea Logistics Solutions Ltd.
Consolidated Statements of Operation
| Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| (unaudited) | (unaudited) | ||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Voyage revenue | $ | 98,236,752 | $ | 118,627,059 | $ | 349,738,153 | $ | 365,714,864 | |||||||||||||||
| Charter revenue | 14,616,574 | 11,850,564 | 33,157,838 | 46,482,955 | |||||||||||||||||||
| Total revenue | 112,853,326 | 130,477,623 | 382,895,991 | 412,197,819 | |||||||||||||||||||
| Expenses: | |||||||||||||||||||||||
| Voyage expense | 41,598,040 | 50,977,508 | 161,881,133 | 165,478,629 | |||||||||||||||||||
| Charter hire expense | 45,270,313 | 47,705,639 | 127,769,042 | 132,950,418 | |||||||||||||||||||
| Vessel operating expenses | 9,088,496 | 13,105,772 | 38,047,308 | 45,266,464 | |||||||||||||||||||
| General and administrative | 4,357,441 | 5,217,757 | 15,915,035 | 17,378,681 | |||||||||||||||||||
| Depreciation and amortization | 4,237,011 | 5,008,398 | 17,055,271 | 18,529,476 | |||||||||||||||||||
| Loss on impairment of vessels | — | 4,751,143 | 1,801,039 | 4,751,143 | |||||||||||||||||||
| Loss on sale of vessels | 25,000 | 4,584,796 | 730,065 | 4,584,796 | |||||||||||||||||||
| Total expenses | 104,576,301 | 131,351,013 | 363,198,893 | 388,939,607 | |||||||||||||||||||
| Income (loss) from operations | 8,277,025 | (873,390) | 19,697,098 | 23,258,212 | |||||||||||||||||||
| Other (expense) income: | |||||||||||||||||||||||
| Interest expense, net | (1,757,715) | (2,419,947) | (7,831,314) | (9,227,784) | |||||||||||||||||||
| Interest expense, related party | — | (1,303) | — | (50,241) | |||||||||||||||||||
| Unrealized gain/(loss) on derivative instruments | 1,374,856 | 549,935 | (156,019) | 2,753,834 | |||||||||||||||||||
| Other (expense)/income | (14,389) | (265,259) | 982,345 | 314,847 | |||||||||||||||||||
| Total other expense, net | (397,248) | (2,136,574) | (7,004,988) | (6,209,344) | |||||||||||||||||||
| Net income (loss) | 7,879,777 | (3,009,964) | 12,692,110 | 17,048,868 | |||||||||||||||||||
| Income attributable to noncontrolling interests | (289,643) | (1,388,693) | (1,339,930) | (5,390,910) | |||||||||||||||||||
| Net income/(loss) attributable to Pangaea Logistics Solutions Ltd. | $ | 7,590,134 | $ | (4,398,657) | $ | 11,352,180 | $ | 11,657,958 | |||||||||||||||
| Earnings per common share: | |||||||||||||||||||||||
| Basic | $ | 0.17 | $ | (0.10) | $ | 0.26 | $ | 0.27 | |||||||||||||||
| Diluted | $ | 0.17 | $ | (0.10) | $ | 0.26 | $ | 0.27 | |||||||||||||||
| Weighted average shares used to compute earnings per common share | |||||||||||||||||||||||
| Basic | 43,489,698 | 42,819,589 | 43,417,879 | 42,752,413 | |||||||||||||||||||
| Diluted | 44,337,242 | 42,819,589 | 43,817,348 | 43,267,178 | |||||||||||||||||||
Pangaea Logistics Solutions Ltd.
Consolidated Balance Sheets
| December 31, 2020 | December 31, 2019 | ||||||||||
| Assets | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ | 46,897,216 | $ | 50,555,091 | |||||||
| Restricted cash | 1,500,000 | 1,000,000 | |||||||||
| Accounts receivable (net of allowance of $1,896,038 and $1,908,841 at December 31, 2020 and 2019, respectively) | 29,152,153 | 28,309,402 | |||||||||
| Bunker inventory | 15,966,247 | 21,001,010 | |||||||||
| Advance hire, prepaid expenses and other current assets | 19,515,945 | 18,770,825 | |||||||||
| Vessels held for sale, net | — | 8,319,152 | |||||||||
| Total current assets | 113,031,561 | 127,955,480 | |||||||||
| Restricted cash | — | 1,500,000 | |||||||||
| Fixed assets, net | 276,741,751 | 281,474,857 | |||||||||
| Investment in newbuildings in-process | 15,390,635 | 15,357,189 | |||||||||
| Finance lease right of use assets, net | 45,240,198 | 53,615,305 | |||||||||
| Total assets | $ | 450,404,145 | $ | 479,902,831 | |||||||
| Liabilities and stockholders' equity | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable, accrued expenses and other current liabilities | $ | 32,400,288 | $ | 39,973,635 | |||||||
| Related party notes payable | 242,852 | 332,987 | |||||||||
| Deferred revenue | 12,799,561 | 14,376,394 | |||||||||
| Current portion of long-term debt | 57,382,674 | 22,990,674 | |||||||||
| Current portion of finance lease liabilities | 6,978,192 | 12,549,208 | |||||||||
| Dividends payable | 1,005,763 | 631,961 | |||||||||
| Total current liabilities | 110,809,330 | 90,854,859 | |||||||||
| Secured long-term debt, net | 44,507,708 | 83,649,717 | |||||||||
| Finance lease liabilities | 50,520,294 | 57,498,217 | |||||||||
| Long-term liabilities - other | 10,135,408 | 4,828,364 | |||||||||
| 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, 45,447,751 and 44,886,122 shares issued and outstanding at December 31, 2020 and 2019, respectively | 4,545 | 4,489 | |||||||||
| Additional paid-in capital | 159,581,415 | 157,504,895 | |||||||||
| Retained Earnings | 23,179,805 | 12,736,580 | |||||||||
| Total Pangaea Logistics Solutions Ltd. equity | 182,765,765 | 170,245,964 | |||||||||
| Non-controlling interests | 51,665,640 | 72,825,710 | |||||||||
| Total stockholders' equity | 234,431,405 | 243,071,674 | |||||||||
| Total liabilities and stockholders' equity | $ | 450,404,145 | $ | 479,902,831 | |||||||
Pangaea Logistics Solutions Ltd.
Consolidated Statements of Cash Flows
| Years ended December 31, | |||||||||||
| 2020 | 2019 | ||||||||||
| Operating activities | |||||||||||
| Net income | $ | 12,692,110 | $ | 17,048,868 | |||||||
| Adjustments to reconcile net income to net cash provided by operations: | |||||||||||
| Depreciation and amortization expense | 17,055,271 | 18,529,476 | |||||||||
| Amortization of deferred financing costs | 662,440 | 727,020 | |||||||||
| Amortization of prepaid rent | 122,272 | 118,597 | |||||||||
| Unrealized loss (gain) on derivative instruments | 156,019 | (2,753,834) | |||||||||
| Income from equity method investee | (1,083,142) | (156,137) | |||||||||
| Earnings attributable to non-controlling interest recorded as interest expense | 177,802 | 44,950 | |||||||||
| Provision for doubtful accounts | 152,416 | 898,357 | |||||||||
| Loss on impairment of vessels | 1,801,039 | 4,751,143 | |||||||||
| Loss on sales of vessels | 730,065 | 4,584,796 | |||||||||
| Drydocking costs | (5,858,960) | (1,633,771) | |||||||||
| Share-based compensation | 2,314,940 | 1,737,315 | |||||||||
| Change in operating assets and liabilities: | |||||||||||
| Accounts receivable | (995,167) | (725,972) | |||||||||
| Bunker inventory | 5,034,763 | (2,425,497) | |||||||||
| Advance hire, prepaid expenses and other current assets | 338,022 | (6,247,268) | |||||||||
| Accounts payable, accrued expenses and other current liabilities | (10,887,555) | 10,301,367 | |||||||||
| Deferred revenue | (1,576,833) | (340,678) | |||||||||
| Net cash provided by operating activities | 20,835,502 | 44,458,732 | |||||||||
| Investing activities | |||||||||||
| Purchase of vessels and vessel improvements | (2,892,776) | (41,350,536) | |||||||||
| Proceeds from sale of vessels | 11,666,507 | 10,388,723 | |||||||||
| Acquisition of non-controlling interest | (15,000,000) | — | |||||||||
| Deposits on newbuildings in-process | (33,446) | (15,357,189) | |||||||||
| Purchase of building and equipment | — | (283,244) | |||||||||
| Purchase of derivative instrument | (628,000) | — | |||||||||
| Net cash used in investing activities | (6,887,715) | (46,602,246) | |||||||||
| Financing activities | |||||||||||
| Payments on related party notes payable | — | (2,595,000) | |||||||||
| Proceeds from long-term debt | 18,000,000 | 14,000,000 | |||||||||
| Payments of financing and issuance costs | (421,775) | (2,960,899) | |||||||||
| Payments of long-term debt | (22,990,674) | (20,627,742) | |||||||||
| Proceeds from finance leases | — | 25,600,000 | |||||||||
| Payments on finance lease obligation | (12,548,938) | (6,602,265) | |||||||||
| Dividends paid to non-controlling interests | — | (4,666,665) | |||||||||
| Common stock accrued dividends paid | (535,153) | (8,090,213) | |||||||||
| Cash paid for incentive compensation shares relinquished | (238,364) | (179,279) | |||||||||
| Contributions from non-controlling interests recorded as long-term liability | — | 4,783,414 | |||||||||
| Contributions from non-controlling interests | 322,750 | 422,519 | |||||||||
| Payments to non-controlling interest recorded as long-term liability | (193,508) | — | |||||||||
| Net cash used in financing activities | (18,605,662) | (916,130) | |||||||||
| Net (decrease)/increase in cash, cash equivalents and restricted cash | (4,657,875) | (3,059,644) | |||||||||
| 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 | $ | 48,397,216 | $ | 53,055,091 | |||||||
| Supplemental cash flow items: | |||||||||||
| Cash paid for interest | $ | 7,149,210 | $ | 9,250,743 | |||||||
| Supplemental non-cash investing and financing Information: | |||||||||||
| Deferred consideration related to acquisition of non-controlling interest | $ | 7,500,000 | $ | — | |||||||
Pangaea Logistics Solutions Ltd.
Reconciliation of Non-GAAP Measures
(unaudited)
| For the three months ended | For the twelve months ended | ||||||||||||||||||||||
| December 31, 2020 | December 31, 2019 | December 31, 2020 | December 31, 2019 | ||||||||||||||||||||
| (unaudited) | (unaudited) | ||||||||||||||||||||||
Net Transportation and Service Revenue (1) | |||||||||||||||||||||||
| Gross Profit | $ | 12,704,301 | $ | 13,712,008 | $ | 38,325,247 | $ | 50,107,841 | |||||||||||||||
| Add: | |||||||||||||||||||||||
| Vessel Depreciation and amortization | 4,192,176 | 4,976,696 | 16,873,261 | 18,394,467 | |||||||||||||||||||
| Net transportation and service revenue | $ | 16,896,477 | $ | 18,688,704 | $ | 55,198,508 | $ | 68,502,308 | |||||||||||||||
| Adjusted EBITDA (in millions) | |||||||||||||||||||||||
| Income/(loss) from operations | $ | 8,277,025 | $ | (873,390) | $ | 19,697,098 | $ | 23,258,212 | |||||||||||||||
| Depreciation and amortization | 4,237,011 | 5,008,398 | 17,055,271 | 18,529,476 | |||||||||||||||||||
| Loss on impairment of vessels | — | 4,751,143 | 1,801,039 | 4,751,143 | |||||||||||||||||||
| Loss on sale of vessels | 25,000 | 4,584,796 | 730,065 | 4,584,796 | |||||||||||||||||||
| Share-based compensation | $ | 399,752 | $ | 371,347 | 2,314,940 | 1,737,315 | |||||||||||||||||
| Adjusted EBITDA | $ | 12,938,788 | $ | 13,842,294 | $ | 41,598,413 | $ | 52,860,942 | |||||||||||||||
| Earnings Per Common Share | |||||||||||||||||||||||
| Net income/(loss) attributable to Pangaea Logistics Solutions Ltd. | $ | 7,590,134 | $ | (4,398,657) | $ | 11,352,180 | $ | 11,657,958 | |||||||||||||||
| Weighted average number of common shares - basic | 43,489,698 | 42,819,589 | 43,417,879 | 42,752,413 | |||||||||||||||||||
| Weighted average number of common shares - diluted | 44,337,242 | 42,819,589 | 43,817,348 | 43,267,178 | |||||||||||||||||||
| Earnings per common share - basic | $ | 0.17 | $ | (0.10) | $ | 0.26 | $ | 0.27 | |||||||||||||||
| Earnings per common share - diluted | $ | 0.17 | $ | (0.10) | $ | 0.26 | $ | 0.27 | |||||||||||||||
| Adjusted EPS | |||||||||||||||||||||||
| Net income/(loss) attributable to Pangaea Logistics Solutions Ltd. | $ | 7,590,134 | $ | (4,398,657) | $ | 11,352,180 | $ | 11,657,958 | |||||||||||||||
| Non-GAAP | |||||||||||||||||||||||
| Add: | |||||||||||||||||||||||
| Loss on impairment of vessels | — | 4,751,143 | 1,801,039 | 4,751,143 | |||||||||||||||||||
| Loss on sale of vessels | 25,000 | 4,584,796 | 730,065 | 4,584,796 | |||||||||||||||||||
| Unrealized gain/(loss) on derivative instruments | 1,374,856 | 549,935 | (156,019) | 2,753,834 | |||||||||||||||||||
| Non-GAAP adjusted net income attributable to Pangaea Logistics Solutions Ltd. | $ | 6,240,278 | $ | 4,387,347 | $ | 14,039,303 | $ | 18,240,063 | |||||||||||||||
| Weighted average number of common shares - basic | 43,489,698 | 42,818,589 | 43,417,879 | 42,752,413 | |||||||||||||||||||
| Weighted average number of common shares - diluted | 44,337,242 | 42,819,589 | 43,817,348 | 43,267,178 | |||||||||||||||||||
| Adjusted EPS - basic | $ | 0.14 | $ | 0.10 | $ | 0.32 | $ | 0.43 | |||||||||||||||
| Adjusted EPS - diluted | $ | 0.14 | $ | 0.10 | $ | 0.32 | $ | 0.42 | |||||||||||||||
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
| Gianni Del Signore | Tiya Gulanikar | |||||||
| Chief Financial Officer | Prosek Partners | |||||||
| 401-846-7790 | 646-818-9288 | |||||||
| [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.
FOURTH QUARTER 2020 EARNINGS CONFERENCE CALL PRESENTATION 1
SAFE HARBOR This presentation includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding future financial performance, future growth and future acquisitions. These statements are based on Pangaea’s and managements’ current expectations or beliefs and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements herein due to changes in economic, business, competitive and/or regulatory factors, and other risks and uncertainties affecting the operation of Pangaea’s business. These risks, uncertainties and contingencies include: business conditions; weather and natural disasters; changing interpretations of GAAP; outcomes of government reviews; inquiries and investigations and related litigation; continued compliance with government regulations; legislation or regulatory environments; requirements or changes adversely affecting the business in which Pangaea is engaged; fluctuations in customer demand; management of rapid growth; intensity of competition from other providers of logistics and shipping services; general economic conditions; geopolitical events and regulatory changes; and other factors set forth in Pangaea’s filings with the Securities and Exchange Commission and the filings of its predecessors. The information set forth herein should be read in light of such risks. Further, investors should keep in mind that certain of Pangaea’s financial results are unaudited and do not conform to SEC Regulation S-X and as a result such information may fluctuate materially depending on many factors. Accordingly, Pangaea’s financial results in any particular period may not be indicative of future results. Pangaea is not under any obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise. 2
BUSINESS HIGHLIGHTS •Adjusted EBITDAof $12.9 million •Net income of $7.6 million •$48.4 million cash, restricted cash and cash equivalents Q4‐2020 Results •17 drybulk ships and one barge in owned and controlled fleet at December 31, 2020 Fleet •Operating 53 vessels on average during Q4 2020 •6.7 million tons carried; 122 voyages performed for 59 clients Operations 1) Adjusted EBITDA is a non‐GAAP measure and represents income or loss from operations before depreciation and amortization, loss on sale and leaseback of vessel, share‐based compensation, and when applicable, loss on impairment of vessels and certain non‐recurring items. Consistent Performance Working Fleet Extensive and varied experience 3
Customer Focus: Long‐term, fixed contract employment and recurring business with new and longstanding customers Targeted Business: Specialty tonnage provides superior returns – 42% premium over average market rates in Q4 – 2020 Rate Environment: The Baltic Dry Index average decreased in the fourth quarter compared to prior year. (1) Per reported indices DRIVERS OF PERFORMANCE 4 0 500 1000 1500 2000 2500 Baltic Dry Index (1)
4th Quarter Highlights • Net income attributable to Pangaea Logistics Solutions Ltd. was $7.6 million for three months ended December 31, 2020 as compared to $4.4 million of net loss for the same period of 2019. o Non‐GAAP adjusted net income attributable to Pangaea Logistics Solutions Ltd. of $6.2 million as compared to $4.4 million for the three months ended December 31, 2019. • Adjusted Earnings per share was $0.14 for three months ended December 31, 2020 as compared to $0.10 for the same period of 2019. • Pangaea's TCE rates were $14,640 for the three months ended December 31, 2020. The market average for the fourth quarter of 2020 was approximately $10,326, giving the Company an overall average premium over market rates of approximately $4,314 or 42%. • Adjusted EBITDA of $12.9 million for the three months ended December 31, 2020, compared to $13.8 million for the same period of 2019. • At the end of the quarter, Pangaea had $48.4 million in cash, restricted cash and cash equivalents. FINANCIAL HIGHLIGHTS 5
1) Adjusted EBITDA is a non‐GAAP measure and represents income or loss from operations before depreciation and amortization, loss on sale and leaseback of vessel, share‐based compensation, and when applicable, loss on impairment of vessels and certain non‐recurring items. SELECTED INCOME STATEMENT DATA 6 (in thousands,may not foot due to rounding) Three months ended December 31, Years Ended December 31, 2020 2019 2020 2019 (unaudited) (unaudited) Revenues: Voyage revenue $ 98,237 $ 118,627 $ 349,738 $ 365,715 Charter revenue 14,617 11,851 33,158 46,483 Total revenue 112,853 130,478 382,896 412,198 Expenses: Voyage expense 41,598 50,978 161,881 165,479 Charter hire expense 45,270 47,706 127,769 132,950 Vessel operating expenses 9,088 13,106 38,047 45,266 General and administrative 4,357 5,218 15,915 17,379 Depreciation and amortization 4,237 5,008 17,055 18,529 Loss on impairment of vessels ‐ 4,751 1,801 4,751 Loss on sale of vessels 25 4,585 730 4,585 Total expenses 104,576 131,351 363,199 388,940 Income from operations 8,277 (873) 19,697 23,258 Total other expense, net (397) (2,137) (7,005) (6,209) Net income 7,880 (3,010) 12,692 17,049 Income attributable to noncontrolling interests (290) (1,389) (1,340) (5,391) Net income attributable to Pangaea Logistics Solutions Ltd. $ 7,590 $ (4,399) $ 11,352 $ 11,658 Adjusted EBITDA (1) $ 12,939 $ 13,842 $ 41,598 $ 52,861
SELECTED BALANCE SHEET & CASH FLOW DATA 7 The amounts in the table above have been calculated based on unrounded numbers. Accordingly, certain amounts may not sum due to the effect of rounding. (in thousands) December 31, 2020 December 31, 2019 Current Assets Cash and cash equivalents 46,897$ 50,555$ Restricted cash 1,500 1,000 Accounts receivable, net 29,152 28,309 Other current assets 35,482 48,091 Total current assets 113,032 127,955 Restricted cash ‐ 1,500 Fixed assets, including finance lease right of use assets, net 321,982 335,090 Investment in newbuildings in‐process 15,391 15,357 Total assets 450,404$ 479,903$ Current liabilities Accounts payable, accrued expenses and other current liabilities 32,400$ 39,974$ Related party debt 243 333 Current portion long‐term debt and finance lease liabilities 64,361 35,540 Other current liabilities 13,805 15,008 Total current liabilties 110,809 90,855 Secured long‐term debt and finance lease liabilities, net 95,028 141,148 Other long‐term liabilities 10,135 4,828 Total Pangaea Logistics Solutions Ltd. equity 182,766 170,246 Non‐controlling interests 51,666 72,826 Total stockholders' equity 234,431 243,072 Total liabilities and stockholders' equity 450,404$ 479,903$ Cash flows for the years ended: December 31, 2020 December 31, 2019 Net cash provided by operating activities 20,836$ 44,459$ Net cash used in investing activities (6,888)$ (46,602)$ Net cash used in financing activities (18,606)$ (916)$
TOTAL SHIPPING DAYS 8 Capital Efficiency: Leveraged owned fleet by chartering‐in market vessels Flexibility: Short‐term charters allow us to react quickly and take advantage of arbitrage opportunities 1,718 1,820 1,886 1,875 1,573 1,623 1,566 1,461 2,220 1,742 2,750 3,365 3,003 1,977 3,168 3,406 ‐ 1,000 2,000 3,000 4,000 5,000 6,000 Q1‐19 Q2‐19 Q3‐19 Q4‐19 Q1‐20 Q2‐20 Q3‐20 Q4 ‐20 D ay s Owned Days Charter‐in Days
PANGAEA TCE v. AVERAGE MARKET TCE 9 Consistently outperforming against average Panamax and Supramax index **Average of the published Panamax and Supramax index net of commission $7,160 $8,665 $13,728 $10,819 $5,920 $5,548 $10,286 $10,326 $4,869 $4,268 $2,187 $4,353 $4,588 $5,185 $3,030 $4,314 68% 49% 16% 40% 78% 93% 29% 42% $‐ $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000 Q1‐2019 Q2‐2019 Q3‐2019 Q4‐2019 Q1‐2020 Q2‐2020 Q3‐2020 Q4‐2020 Market Avg TCE** Market Premium over Market Pangaea TCE $12,029 $12,933 $15,915 $15,172 $10,508 $10,733 $13,316 $14,640
1) Adjusted EBITDA is a non‐GAAP measure and represents operating earnings before interest expense, income taxes, depreciation and amortization, share‐based compensation, loss on sale and leaseback of vessels and other non‐operating income and/or expense, if any. 2) TCE is defined as total revenues less voyage expenses divided by the number of shipping days, which is consistent with industry standards. TCE rate is a common shipping industry performance measure used primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charter hire rates for vessels on voyage charters are generally not expressed in per‐day amounts while charter hire rates for vessels on time charters generally are expressed in per‐day amounts. FINANCIAL PERFORMANCE Q1‐2019 THROUGH Q4‐2020 10 ‐ 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 Q1‐19 Q2‐19 Q3‐19 Q4‐19 Q1‐20 Q2‐20 Q3‐20 Q4 ‐20 ADJUSTED EBITDA(1) $‐ $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000 Q1‐19 Q2‐19 Q3‐19 Q4‐19 Q1‐20 Q2‐20 Q3‐20 Q4 ‐20 TCE(2)
ADJUSTED EARNINGS PER COMMON SHARE 11 (1) Adjusted earnings per share represents net income attributable to Pangaea Logistics Solutions Ltd. plus, when applicable, loss on sale and leaseback of vessel, loss on impairment of vessel, gains and losses on derivative instruments, and certain non‐recurring charges, divided by the weighted average number of shares of common stock. Adjusted EPS total of $0.14 for Q4‐2020 0.11 0.14 0.18 0.09 0.03 0.09 0.20 0.10 (0.09) 0.09 0.19 0.14 (0.10) (0.05) ‐ 0.05 0.10 0.15 0.20 0.25 Q1‐18 Q2‐18 Q3‐18 Q4‐18 Q1‐19 Q2‐19 Q3‐19 Q4‐19 Q1‐20 Q2‐20 Q3‐20 Q4 ‐20 Historical Adjusted EPS (1) $0.52 $0.42 $0.33