NEWPORT, R.I.--(BUSINESS WIRE)--Pangaea Logistics Solutions Ltd. (“Pangaea” or the “Company”) (NASDAQ: PANL), a global provider of comprehensive maritime logistics solutions, announced today its results for the quarter ended March 31, 2015.
First Quarter Highlights
- Net Income attributable to Pangaea Logistics Solutions Ltd. was $7.6 million in the first quarter of 2015, or $0.22 per common share, compared with $6.6 million, or $0.19 per share on a pro forma basis1, in the first quarter of 2014, representing 15% growth
- Total revenue of $95.1 million for the first quarter of 2015, a 17% decrease compared to $114.2 million of total revenue reported in the first quarter of 2014
- Adjusted EBITDA2 was $12.9 million in the first quarter of 2015, compared with $12.6 million in the first quarter of 2014, representing 3% growth
- Cash flow from operations was $11.2 million in the first quarter of 2015, compared with $10.4 million in the first quarter of 2014, representing 7% growth
- Continued strong demand for voyage business with a 19% increase in number of voyage days in the first quarter of 2015 compared with the first quarter of 2014
- Average time charter equivalent rates of $12,251 per day for the first quarter of 2015
- At the end of the quarter, Pangaea had $42.6 million in cash and cash equivalents
- Delivery of two new ice-class 1A panamax dry bulk carriers during the quarter, the m/v Nordic Olympic and m/v Nordic Odin in February 2015
Edward Coll, Chairman and Chief Executive Officer of Pangaea Logistics Solutions, stated, “The first quarter of 2015 was an especially strong start to the year as we executed on our disciplined approach to generating revenues in a challenging rate environment. Pangaea’s strategy of hiring vessels for short periods and only against known cargo contracts, together with declining bunker and charter-in costs, served us well during the quarter. Our differentiated and conservative approach to delivering dry bulk logistics services for our customers produced results markedly different from the broader dry bulk industry and in spite of extremely challenging weather and operating conditions in Eastern Canada this winter, and a milder than expected winter in North Europe, which limited demand for the Company’s ice-class tonnage.”
1 Earnings per share represents total earnings allocated to common stock divided by the weighted average number of common shares outstanding. Pro forma adjusted earnings per share represents adjusted total earnings allocated to common stock divided by the weighted average number of shares giving effect to the mergers as if they had been consummated as of January 1, 2014. See Reconciliation of Adjusted EBITDA and Pro Forma Adjusted Earnings Per Share.
2 Adjusted EBITDA is a non-GAAP measure and represents operating earnings before interest expense, income taxes, depreciation and amortization, and other non-operating income and/or expense, if any. See Reconciliation of Adjusted EBITDA and Pro Forma Adjusted Earnings Per Share.
Results for the Quarter Ended March 31, 2015
The Company reported net income of $7.6 million, or $0.22 per common share, for the first quarter of 2015, a 15% increase over the first quarter of 2014 when the Company reported net income of $6.6 million, or $0.19 per common share on a pro forma basis. This increase was primarily attributable to voyage revenue tied to COAs making up an increased portion of total revenue when compared to market rate charter revenues. Low charter rates and bunker costs also contributed to this quarter’s results.
Total revenue of $95.1 million for the quarter ended March 31, 2015 decreased 17% from the $114.2 million generated in the same quarter in 2014 and comprised $90.6 million in voyage revenue and $4.5 million in charter revenue, year-over-year decreases of 1% and 80%, respectively. The decline in total revenue was primarily attributable to a 7% decrease in the Company’s total shipping days from 4,357 days in the first quarter of 2014 to 4,065 days in the first quarter of 2015. Total shipping days are the sum of voyage days, which are tied to COAs and increased 19% year-over-year, and charter days, which are subject to market rates and decreased 67% year-over-year. This reflects the Company’s strategy of limiting its exposure to decreasing rates by chartering in vessels only to meet the demands of specific COAs and voyage contracts in order to maximize profitability. Coll noted, “This quarter’s particularly strong results demonstrate the utility of this disciplined strategy in mitigating the impact of low market rates to the extent possible.”
“Because our owned fleet is matched to our portfolio of long-term COAs, we employ our vessels in shipping markets at lower risk,” Coll said. “In a challenging dry bulk market we can mitigate the challenge of low rates by limiting commitments on chartered-in tonnage to very short requirements, which reduces market risk and minimizes idle time.” Coll continued, “This agility allows us to focus on those sectors and routes that present profitable opportunities for voyage and charter business while conserving cash, enabling us to take advantage of attractive opportunities as they present themselves.”
Coll continued, “We will continue to control costs and strategically focus on specific trades where our unique expertise provides us with a competitive advantage, including ice-class and backhaul, to best position the Company for continued growth. Despite this risk-sensitive, flexible approach we are not immune to the historically low rates currently facing the industry and the continued volatility in bunker prices, which may be headwinds for us.”
Cash and cash equivalents were $42.6 million as of March 31, 2015, compared with $29.8 million on December 31, 2014.
For the quarter ended March 31, 2015, the Company’s net cash provided by operating activities was $11.2 million, compared to $10.4 million for the quarter ended March 31, 2014.
For the quarters ended March 31, 2015 and 2014, net cash used in investing activities was $40.3 million and $14.9 million, respectively. Net cash provided by financing activities was $41.9 million and $8.9 million for the quarters ended March 31, 2015 and 2014, respectively. These increases reflect our purchase of new ice-class ships, including the m/v Nordic Olympic and m/v Nordic Odin, partially offset by the sale of the m/v Bulk Cajun.
Conference Call Details
The Company’s management team will host a conference call to discuss our financial results tomorrow, Friday, May 15, 2015 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# 42194922.
|Pangaea Logistics Solutions Ltd.|
|Consolidated Statements of Income|
|Three months ended March 31,|
|Charter hire expense||24,659,395||43,971,061|
|Vessel operating expenses||7,785,328||6,919,497|
|General and administrative||4,318,692||2,576,285|
|Depreciation and amortization||2,990,594||2,551,625|
|Loss on sale of vessels||88,868||-|
|Income from operations||9,948,792||10,059,804|
|Other income (expense):|
|Interest expense, net||(1,410,771)||(1,515,879)|
|Interest expense related party debt||(114,966)||(42,128)|
|Imputed interest on related party long-term debt||-||(322,947)|
Unrealized gain (loss) on derivative instruments
|Other income (expense)||83,149||(150,000)|
|Total other expense, net||(619,133)||(2,402,512)|
|Income attributable to noncontrolling interests||(1,729,730)||(1,064,007)|
|Net income attributable to Pangaea Logistics Solutions Ltd.||$7,599,929||$6,593,285|
|Earnings per common share:|
|Weighted average shares used to compute earnings|
|per common share (Note 8)|
|Basic and diluted||34,756,980||13,421,955|
|Pangaea Logistics Solutions Ltd.|
|Consolidated Balance Sheets|
|Cash and cash equivalents||$42,598,816||$29,817,507|
|Accounts receivable (net of allowance of $4,349,650 at|
|March 31, 2015 and $4,029,669 at December 31, 2014)||19,565,184||27,362,216|
|Advance hire, prepaid expenses and other current assets||3,051,757||6,568,234|
|Vessels held for sale, net||3,741,375||4,523,804|
|Total current assets||83,749,903||84,873,420|
|Fixed assets, net||268,963,912||207,667,613|
|Investment in newbuildings in-process||15,296,477||38,471,430|
|Other noncurrent assets||1,310,216||1,450,802|
|Liabilities and stockholders' equity|
|Accounts payable, accrued expenses and other current liabilities||$28,656,068||$40,201,794|
|Related party debt||61,723,711||59,102,077|
|Current portion long-term debt||22,359,868||17,807,674|
|Line of credit||3,000,000||3,000,000|
|Total current liabilities||136,748,648||144,685,296|
|Secured long-term debt, net||122,728,090||87,430,416|
|Commitments and contingencies|
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|
34,756,980 shares issued and outstanding at March 31, 2015 and December 31, 2014
|Additional paid-in capital||134,122,003||133,955,445|
|Total Pangaea Logistics Solutions Ltd. equity||105,582,681||97,816,194|
|Total stockholders' equity||109,843,770||100,347,553|
|Total liabilities and stockholders' equity||$369,320,508||
|Pangaea Logistics Solutions Ltd.|
|Consolidated Statements of Cash Flows|
|Three months ended March 31,|
Adjustments to reconcile net income to net cash provided by operations:
|Depreciation and amortization expense||2,990,594||2,551,625|
|Amortization of deferred financing costs||225,182||284,743|
|Unrealized (gain) loss on derivative instruments||(823,455)||371,558|
|Loss from equity method investee||(53,201)||-|
|Provision for doubtful accounts||319,981||73,543|
|Loss on sales of vessels||88,868||-|
|Write off unamortized financing costs of repaid debt||25,557||-|
|Amortization of discount on related party long-term debt||-||322,947|
Change in operating assets and liabilities:
|Advance hire, prepaid expenses and other current assets||
|Account payable, accrued expenses and other current liabilities||
|Net cash provided by operating activities||11,183,423||10,438,052|
|Purchase of vessels||(44,824,665)||(14,382,779)|
|Proceeds from sales of vessels||4,523,804||-|
|Deposits on newbuildings in-process||-||(63,953)|
|Purchase of building and equipment||(5,399)||(3,612)|
|Net cash used in investing activities||(40,306,260)||(14,859,344)|
|Proceeds of related party debt||2,506,667||-|
|Payments on related party debt||-||(162,928)|
|Proceeds from long-term debt||45,000,000||13,000,000|
|Payments of financing and issuance costs||(664,722)||(41,079)|
|Payments on long-term debt||(4,837,799)||(3,837,264)|
|Common stock dividends paid||(100,000)||(100,000)|
|Net cash provided by financing activities||41,904,146||8,858,729|
|Net increase in cash and cash equivalents||12,781,309||4,437,437|
|Cash and cash equivalents at beginning of period||29,817,507||18,927,927|
|Cash and cash equivalents at end of period||$42,598,816||$23,365,364|
|Disclosure of noncash items|
|Dividends declared, not paid||
|Imputed interest on related party long-term debt||
|Cash paid for interest||$1,185,589||$1,439,827|
|Pangaea Logistics Solutions Ltd.|
|Reconciliation of Adjusted EBITDA and Pro Forma Adjusted Earnings Per Share|
|Three months ended March 31,|
|Income from operations||$9,949||$10,060|
|Depreciation and amortization||2,991||2,552|
Earnings Per Common Share
|Net Income attributable to Pangaea Logistics Solutions Ltd.||7,560||-|
|Net Income attributable to Bulk Partners (Bermuda) Ltd.||-||6,593|
|less adjustments related to pre-merger capital structure||-||
|Total earnings allocated to common stock||$7,560||
|Weighted average number of common shares outstanding||34,756,980||13,421,955|
|Earnings per common share||$0.22||$0.17|
Pro Forma Adjusted EPS
|Total Income allocated to common stock||$7,560||
|plus adjustments related to pre-merger capital structure||
|Non-GAAP Pro forma adjusted total earnings allocated to common stock||$7,560||$6,593|
|Non-GAAP Pro forma weighted average number of common shares outstanding||34,756,980||34,696,997|
|Non-GAAP Pro forma Adjusted EPS||$0.22||$0.19|
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 (1) non-GAAP adjusted EBITDA and (2) non-GAAP pro forma adjusted earnings per share (“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 these 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 these non-GAAP financial measures provide meaningful supplemental information regarding the performance of our core business by excluding non-cash losses on impairment of vessels and non-recurring charges that may not be indicative of our recurring core business operating results. These non-GAAP financial measures also facilitate management's internal planning and comparisons to our historical performance and liquidity. We believe these 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.
Non-GAAP adjusted net income attributable to Pangaea Logistics Solutions Ltd., Adjusted EBITDA, and pro forma adjusted EPS. Adjusted net income attributable to Pangaea Logistics Solutions Ltd. represents net income attributable to Pangaea Logistics Solutions Ltd. calculated in accordance with GAAP, plus non-cash losses on impairment of vessels and non-recurring charges. Adjusted EBITDA represents operating earnings before interest expense, income taxes, depreciation, amortization and loss on impairment of vessels. Earnings per share represents total earnings allocated to common stock divided by the weighted average number of common shares outstanding. Pro forma adjusted earnings per share represents adjusted total earnings allocated to common stock divided by the weighted average number of shares giving effect to the mergers as if they had been consummated as of January 1, 2014.
There are limitations related to the use of non-GAAP adjusted net income attributable to Pangaea Logistics Solutions Ltd., adjusted EBITDA, and pro forma adjusted EPS versus net income, income from operations, and EPS calculated in accordance with GAAP. In particular, Pangaea’s definition of adjusted net income attributable to Pangaea Logistics Solutions Ltd., adjusted EBITDA, and pro forma adjusted EPS used here is not comparable to net income, EBITDA, and EPS. Management provides specific information in order to reconcile the GAAP or non-GAAP measure to adjusted net income attributable to Pangaea Logistics Solutions Ltd., adjusted EBITDA, and pro forma adjusted EPS.
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.
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.