Pangaea Logistics Solutions Ltd. Reports Financial Results for the Third Quarter Ended September 30, 2014

NEWPORT, R.I.--()--Pangaea Logistics Solutions Ltd. (“Pangaea” or the “Company”) (NASDAQ:PANL), a global provider of comprehensive maritime logistics solutions, announced today the results for Bulk Partners (Bermuda) Ltd., (“Bulk Partners”) for the third quarter ended September 30, 2014. Future reporting will be from Pangaea, the 100% parent of Bulk Partners as of October 1, 2014.

Third Quarter 2014 Highlights & Recent Developments

  • Revenue of $91.2 million for the third quarter of 2014
  • 25% increase in voyage days, demonstrating increasing demand for services
  • Completed public listing; began trading under NASDAQ: PANL
  • Took delivery of m/v Nordic Oshima, a 76,180 dwt ice-class 1A panamax dry bulk carrier
  • Signed two new long-term contracts of affreightment (“COAs”) to support its ice-class fleet

Edward Coll, Chairman and Chief Executive Officer of Pangaea Logistics Solutions, stated, “The third quarter of 2014 presented a challenging rate environment, continuing what we experienced during the second quarter. Despite these headwinds, we were able to effectively leverage our relationships in the industry and create revenue opportunities where others could not. Further, we are incredibly pleased to have begun publicly trading and look forward to building increased shareholder value.”

Third Quarter and Nine-Months 2014 Financial Results

For the quarter ended September 30, 2014, total revenue was $91.2 million. Total revenue was $295.2 million for the nine months ended September 30, 2014.

Bulk Partners reported a loss from operations of $1.9 million for the third quarter of 2014, and income from operations of $11.5 million for the nine months ended September 30, 2014.

Bulk Partners reported a net loss after non-controlling interests of $2.9 million for the third quarter, and net income after non-controlling interests of $4.9 million for the nine months ended September 30, 2014.

“Our voyage days increased 25% in the quarter over the same period last year, demonstrating strong demand for our services,” Coll added. “That said, operating margins were under significant pressure due to weakened market rates in the vast majority of the dry shipping segments.”

Assuming the merger had been consummated as of January 1, 2014, the Company’s pro forma earnings per share for the nine months ended September 30, 2014 was $0.11 basic and diluted, which were calculated based on 34,696,997 shares.

Cash Flows

For the nine months ended September 30, 2014, Bulk Partners’ net cash provided by operating activities was $16.4 million, compared to $18.9 million for the nine months ended September 30, 2013.

For the nine months ended September 30, 2014 and 2013, net cash used in investing activities was $30.1 million and $75.7 million, respectively. Net cash provided by financing activities was $14.9 million and $60.9 million for the nine months ended September 30, 2014 and 2013, respectively. This reflects increased borrowing to finance the purchase of additional vessels and take delivery of the m/v Nordic Oshima.

“We continue to invest operating cash flow in newbuilding vessels in the ice-class trade, a market that is well-protected from the newbuilding backlog and where we have distinct strategic advantages,” Coll said.

Recent Developments

The following events took place after the close of the third quarter:

  • On October 1, 2014, Bulk Partners completed its merger with Quartet. The combined company is a wholly owned subsidiary of Pangaea Logistics Solutions. On October 3, 2014, the Company’s common shares commenced trading on NASDAQ under the ticker symbol PANL.
  • On October 8, 2014, Pangaea announced that ASO 2020 Maritime, an affiliate of the Alexander S. Onassis Public Benefit Foundation, executed a letter of intent to acquire a stake in Pangaea.
  • On October 28, 2014, the Company announced the delivery of the m/v Nordic Oshima, a 76,180 dwt ice-class 1A panamax dry bulk carrier. Pangaea took delivery of the vessel on September 25, 2014 from Oshima Shipbuilding Co., Ltd.
  • On November 14, 2014, the Company announced long-term COAs that will help support the activities of its specialized ice-class 1A panamax vessels.
    • The first contract is a new agreement with an existing client to carry cargo in the Baltic region through 2017. Beginning in 2015, the contract will provide an estimated 240 cargo days of coverage and will contribute revenue of approximately $10 million per year.
    • The second contract is with a new, blue-chip client to carry cargo from 2015 to 2018. Pangaea’s ice-hardened fleet is contracted to transport cargo for an estimated 600 days each summer in the far northern latitudes, contributing revenue of approximately $22 million per year.

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.

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. 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 drybulk 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.

 
Bulk Partners (Bermuda) LTD.
Consolidated Statements of Income
       
 
Three months ended September 30, Nine months ended September 30,
2014 2013 2014 2013
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues:
Voyage revenue $ 80,604,263 $ 80,371,836 $ 252,084,882 $ 246,642,009
Charter revenue 10,600,956 14,797,016 43,112,456 34,328,821
91,205,219 95,168,852 295,197,338 280,970,830
Expenses:
Voyage expense 46,598,184 45,193,740 136,624,745 147,119,813
Charter hire expense 34,315,719 31,984,645 112,271,588 86,098,418
Vessel operating expense 7,935,565 6,148,253 22,587,314 15,710,044
General and administrative 2,790,350 2,747,691 7,719,226 8,592,008
Depreciation and amortization 3,118,973 2,518,726 8,415,174 7,060,351
Gain on sale of vessels (1,661,368) - (3,947,600) -
Total expenses 93,097,423 88,593,055 283,670,447 264,580,634
 
(Loss) income from operations (1,892,204) 6,575,797 11,526,891 16,390,196
 
Other (expense) income:
Interest expense (1,348,252) (1,419,338) (4,338,904) (3,889,788)
Interest expense related party debt (108,422) (194,543) (170,784) (357,341)
Imputed interest on related party long-term debt - (317,942) (322,947) (793,222)
Unrealized (loss) gain on derivative instruments (551,354) 1,854,930 (2,123,246) 183,287
Other income (expense) 83,803 (515,677) 8,030 (197,127)
Total other expense, net (1,924,225) (592,570) (6,947,851) (5,054,191)
 
Net (loss) income (3,816,429) 5,983,227 4,579,040 11,336,005
Loss (income) attributable to noncontrolling interests 906,822 (113,827) 334,563 (820,323)
Net (loss) income attributable to Pangaea Logistics Solutions Ltd. $ (2,909,607) $ 5,869,400 $ 4,913,603 $ 10,515,682
 
Loss per common share:
Basic $ (64.68) $ (7.77) $ (15.92) $ (63.30)
Diluted $ (64.68) $ (7.77) $ (15.92) $ (63.30)
 
Weighted average shares used to compute loss
per common share, basic and diluted 87,329 87,329 87,329 87,329
 
 
Bulk Partners (Bermuda) LTD.
Consolidated Balance Sheets
 
 
 
 
September 30, December 31,
2014 2013
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 20,157,708 $ 18,927,927
Restricted cash 500,000 500,000

Accounts receivable (net of allowance of $2,047,603 at
September 30, 2014 and $1,662,593 at December 31, 2013)

 

30,462,924 44,688,470
Other receivables 287,668 133,646
Bunker inventory 21,050,009 21,072,192
Advance hire, prepaid expenses and other current assets 10,916,092 12,744,125
Total current assets 83,374,401 98,066,360
 
Fixed assets, net 225,179,262 197,153,889
Investment in newbuildings in-process 25,576,943 31,900,000
Other noncurrent assets 1,495,078 3,253,022
Total assets $ 335,625,684 $ 330,373,271
 

Liabilities, convertible redeemable preferred stock
and stockholders' equity

Current liabilities
Accounts payable and accrued expenses $ 40,623,223 $ 45,878,378
Related party debt 46,371,713 7,616,248
Deferred revenue 5,862,960 16,155,498
Current portion long-term debt 18,686,730 16,065,483
Line of credit 3,000,000 3,000,000
Dividend payable 29,381,125 23,177,503
Other current liablities 263,982 -
Total current liabilties 144,189,733 111,893,110
 
Secured long-term debt, net 91,719,946 83,302,421
Related party long-term debt, net - 17,303,918
 
Commitments and contingencies
 

Convertible redeemable preferred stock, net of issuance costs
($1,000 par value, 112,500 shares authorized, 89,114
and 64,047 shares issued and outstanding at September 30, 2014
December 31, 2013, respectively)

103,236,399 103,236,399
 
Stockholders' equity (deficit):

Common stock ($1.00 par value, 199,829 shares authorized
87,329 shares issued and outstanding at September 30, 2014,
December 31, 2013 and December 31, 2012
191,606 shares issued and outstanding on pro forma basis

87,329 87,329
Additional paid-in capital - -
Accumulated deficit (7,324,015) (5,933,870)
Total Pangaea Logistics Solutions Ltd. deficit (7,236,686) (5,846,541)
Non-controlling interest 3,716,292 20,483,964
Total stockholders' (deficit) equity (3,520,394) 14,637,423
Total liabilities, convertible reemable preferred stock    
and stockholders' (deficit) equity $ 335,625,684 # $ 330,373,271
 
 
Bulk Partners (Bermuda) LTD.
Consolidated Statements of Cash Flows
 
        Nine months ended September 30,
2014   2013
(unaudited) (unaudited)
Operating activities
Net income $ 4,579,040 $ 11,336,005
Adjustments to reconcile net income to net cash
provided by operations:
Depreciation and amortization expense 8,415,174 7,060,351
Amortization of deferred financing costs 627,961 658,089
Unrealized loss (gain) on derivative instruments 2,123,246 (183,287)
Provision for doubtful accounts (385,010) -
Write off of unamortized financing costs 241,522 -
Amortization of discount on related party long-term debt 322,947 -
Imputed interest on related party long-term debt - 793,222
Change in operating assets and liabilities:
Accounts receivable 14,610,555 1,018,218
Other receivables (154,022) (56,781)
Bunker inventory 22,183 (4,490,193)
Advance hire, prepaid expenses and other current assets 1,770,164 687,302
Other non-current assets (236,223) -
Account payable, accrued expenses and other current liabilities (4,570,546) 2,343,788
Other current liabilities (657,491) (381,011)
Deferred revenue (10,292,538) 147,241
Net cash provided by operating activities 16,416,962 18,932,944
 
Investing activites
Purchase of vessels (38,288,452) (75,588,933)
Sale of vessels 19,331,787 -
Deposits on newbuildings in-process (6,960,499) -
Drydocking costs (3,639,677) -
Purchase of building and equipment (558,376) (92,388)
Net cash used in investing activities (30,115,217) (75,681,321)
 
Financing activities
Proceeds of related party debt 4,750,000 21,559,972
Payments on related party debt (54,507) (203,582)
Proceeds from long-term debt 35,500,000 32,205,000
Payments of financing and issuance costs (366,800) (1,595,450)
Payments on long-term debt (24,800,657) (9,713,178)
Proceeds from issuance of convertible redeemable preferred stock - 18,199,180
Common stock dividends paid (100,000) (100,000)
Decrease (increase) in restricted cash - 687,500
Distributions to non-controlling interest - (176,667)
Net cash provided by financing activities 14,928,036 60,862,775
 
Net increase in cash and cash equivalents 1,229,781 4,114,398
Cash and cash equivalents at beginning of period 18,927,927 19,695,675
Cash and cash equivalents at end of period $ 20,157,708 $ 23,810,073
 
 
Bulk Partners (Bermuda) LTD.
Consolidated Statements of Cash Flows
 
        Nine months ended September 30,
2014   2013
(unaudited) (unaudited)
 
Disclosure of noncash items
Dividends declared, not paid $ 6,303,622 $ 5,769,050
Issuance of convertible redeemable preferred stock

as settlement of accrued dividends

$ - $ 213,152
Issuance of convertible redeemable preferred stock
in settlement of notes payable $ - $ 1,385,503
Beneficial conversion feature of convertible redeemable
preferred stock at issuance date $ - $ 5,748,464
Modification of Shareholder loan to on Demand $ 16,433,108  
Imputed interest on related party long-term debt $ 322,947 $ 793,222
Discount on related party long-term debt $ - $ 17,080,063
Cash paid for interest $ 3,660,117 $ 4,366,007
 

Contacts

Investor Relations
Prosek Partners
Thomas Rozycki, 212-279-3115 x208
Managing Director
trozycki@prosek.com

Contacts

Investor Relations
Prosek Partners
Thomas Rozycki, 212-279-3115 x208
Managing Director
trozycki@prosek.com