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-filingsor 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, 2020 2019 (unaudited) (unaudited)Twelve months ended December 31, 2020 2019
Revenues:
Voyage revenue
Charter revenue
33,157,838 46,482,955
Total revenue
$
98,236,752 $ 14,616,574 112,853,326
118,627,059 $ 11,850,564 130,477,623
349,738,153 $ 365,714,864
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
5,008,398
17,055,271 18,529,476
Loss on impairment of vessels
4,237,011 -
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
Unrealized gain/(loss) on derivative instruments
1,374,856
Other (expense)/income
(14,389)
-
(1,303) 549,935 (265,259)
- (156,019) 982,345
(50,241) 2,753,834 314,847
Total other expense, net
(397,248)
(2,136,574) (7,004,988)
(6,209,344)
Net income (loss)
(3,009,964) 12,692,110
Income attributable to noncontrolling interests
7,879,777 (289,643)
(1,388,693) (1,339,930)
17,048,868 (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 $ 0.17 $
(0.10) $ (0.10) $
0.26 $ 0.27
Diluted
0.26 $ 0.27
Weighted average shares used to compute earnings per common share
Basic
43,489,698 44,337,242
42,819,589 42,819,589
43,417,879 42,752,413
Diluted
43,817,348 43,267,178
Pangaea Logistics Solutions Ltd.
Consolidated Balance SheetsAssets
Current Assets
Cash and cash equivalents Restricted cash
Accounts receivable (net of allowance of $1,896,038 and $1,908,841 at December 31, 2020 and 2019, respectively)
Bunker inventory
December 31, 2020
December 31, 2019
$
46,897,216 $ 50,555,091 1,500,000 1,000,000
29,152,153 28,309,402
15,966,247 21,001,010
19,515,945 18,770,825
Advance hire, prepaid expenses and other current assets Vessels held for sale, net
- 8,319,152
Total current assets
113,031,561 127,955,480
Restricted cash Fixed assets, net
Investment in newbuildings in-process Finance lease right of use assets, net
- 1,500,000 276,741,751 281,474,857 15,390,635 15,357,189 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 Related party notes payable
$
32,400,288 242,852
$ 39,973,635 332,987
Deferred revenue
12,799,561 14,376,394
Current portion of long-term debt Current portion of finance lease liabilities Dividends payable
57,382,674 22,990,674
6,978,192 12,549,208
1,005,763
631,961
Total current liabilities
110,809,330 90,854,859
44,507,708 83,649,717
10,135,408 4,828,364
Secured long-term debt, net Finance lease liabilities Long-term liabilities - other
50,520,294 57,498,217
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
Additional paid-in capital
- 4,545
- 4,489
159,581,415 157,504,895
Retained Earnings
23,179,805 12,736,580
Total Pangaea Logistics Solutions Ltd. equity Non-controlling interests
182,765,765 170,245,964
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
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization expense
$
12,692,110 $ 17,048,868 17,055,271 18,529,476
662,440 727,020
Amortization of deferred financing costs Amortization of prepaid rent
Unrealized loss (gain) on derivative instruments Income from equity method investee
Earnings attributable to non-controlling interest recorded as interest expense Provision for doubtful accounts
122,272 118,597
156,019 (1,083,142)
(2,753,834)
(156,137)
177,802 152,416
44,950 898,357
1,801,039 4,751,143
Loss on impairment of vessels Loss on sales of vessels Drydocking costs Share-based compensation
730,065 4,584,796
(5,858,960) 2,314,940
(1,633,771) 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 Accounts payable, accrued expenses and other current liabilities Deferred revenue
338,022 (6,247,268)
Net cash provided by operating activities
Investing activities
Purchase of vessels and vessel improvements Proceeds from sale of vessels
Acquisition of non-controlling interest Deposits on newbuildings in-process Purchase of building and equipment Purchase of derivative instrument Net cash used in investing activities
(10,887,555) (1,576,833) 20,835,502
10,301,367
(340,678) 44,458,732
(2,892,776)
(41,350,536)
(15,000,000)
11,666,507
10,388,723 -
(33,446)
(15,357,189)
-
(283,244)
(628,000)
-
(6,887,715) (46,602,246)
Financing activities
- (2,595,000)
Payments on related party notes payable Proceeds from long-term debt
18,000,000
14,000,000
(421,775) (2,960,899)
Payments of financing and issuance costs Payments of long-term debt
(22,990,674) (20,627,742)
Proceeds from finance leases Payments on finance lease obligation Dividends paid to non-controlling interests Common stock accrued dividends paid
-
25,600,000
(12,548,938) (6,602,265)
- (4,666,665)
(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 Contributions from non-controlling interests
-
322,750
(18,605,662)
(916,130)
4,783,414
Payments to non-controlling interest recorded as long-term liability Net cash used in financing activities
(193,508)
422,519 -
(4,657,875)
(3,059,644)
$
48,397,216
$ 53,055,091
Net (decrease)/increase in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash at beginning of period Cash, cash equivalents and restricted cash at end of period Supplemental cash flow items:
53,055,091 56,114,735
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 December 31, December 31, 2020 2019
For the twelve months ended
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:
$
16,896,477
$ 18,688,704
$
55,198,508
$ 68,502,308
Vessel Depreciation and amortization Net transportation and service revenue
4,192,176 4,976,696
16,873,261 18,394,467
Adjusted EBITDA (in millions)
17,055,271 18,529,476
25,000
730,065 4,584,796
12,938,788
$
13,842,294
$
41,598,413
$ 52,860,942
Income/(loss) from operations Depreciation and amortization Loss on impairment of vessels Loss on sale of vessels Share-based compensation Adjusted EBITDA
$
8,277,025
$ (873,390) $ 19,697,098
$ 23,258,212
4,237,011 -
5,008,398 4,751,143 4,584,796
1,801,039 4,751,143
$ $
399,752
$ 371,347
2,314,940 1,737,315
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
44,337,242
42,819,589
43,817,348 43,267,178
Weighted average number of common shares - basic Weighted average number of common shares - diluted
43,489,698 42,819,589
43,417,879 42,752,413
Earnings per common share - basic Earnings per common share - diluted
$ $
0.17 0.17
$ $
(0.10) $ (0.10) $
0.26 0.26
$ 0.27
$ 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 Loss on sale of vessels
Unrealized gain/(loss) on derivative instruments
- 25,000 1,374,856
4,751,143 1,801,039 4,751,143
4,584,796 549,935
Non-GAAP adjusted net income attributable to Pangaea Logistics Solutions Ltd.
$
6,240,278 $ 4,387,347
$
43,489,698 42,818,589
Weighted average number of common shares - basic Weighted average number of common shares - diluted
44,337,242
42,819,589
730,065 4,584,796 (156,019) 2,753,834 14,039,303 $ 18,240,063 43,417,879 42,752,413 43,817,348 43,267,178
Adjusted EPS - basic Adjusted EPS - diluted
$ $
0.14 0.14
$ $
0.10 0.10
$ $
0.32 0.32
$ 0.43
$ 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-GAAPnet 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 atwww.pangaeals.com.
Investor Relations Contacts
Gianni Del Signore | Tiya Gulanikar |
Chief Financial Officer | Prosek Partners |
401-846-7790 | 646-818-9288 |
Investors@pangaeals.com | tgulanikar@prosek.com |
Forward-Looking Statements
Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Act of 1995. These forward-looking statements are based on our current expectations and beliefs and are subject to a number of risk factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The Company disclaims any obligation to publicly update or revise these statements whether as a result of new information, future events or otherwise, except as required by law. Such risks and uncertainties include, without limitation, the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand for dry bulk shipping capacity, changes in our operating expenses, including bunker prices, dry-docking and insurance costs, the market for our vessels, availability of financing and refinancing, charter counterparty performance, ability to obtain financing and comply with covenants in such financing arrangements, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, vessels breakdowns and instances of off-hires and other factors, as well as other risks that have been included in filings with the Securities and Exchange Commission, all of which are available atwww.sec.gov.
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Pangaea Logistics Solutions Ltd. published this content on 16 March 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 March 2021 03:39:02 UTC.