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 September 30, 2015.
Third Quarter Highlights
- Net income attributable to Pangaea Logistics Solutions Ltd. was $3.0 million in the third quarter of 2015, compared to a net loss of $2.9 million in the third quarter of 2014
- Pro forma adjusted earnings per common share1 of $0.08 in the third quarter of 2015, compared to a pro forma adjusted loss per common share of $0.08 in the third quarter of 2014
- Adjusted EBITDA2 increased to $8.1 million in the third quarter of 2015, compared with $1.2 million in the third quarter of 2014
- Cash flow from operations was $18.0 million for the nine months ended September 30, 2015, compared with $12.5 million for the same period in 2014
- At the end of the quarter, Pangaea had $34.2 million in cash and cash equivalents
- Acquired the remaining non-controlling interest in Nordic Bulk Carriers AS (“NBC”), making NBC a wholly-owned subsidiary of Pangaea
Edward Coll, Chairman and Chief Executive Officer of Pangaea Logistics Solutions, said, “This quarter’s performance exemplifies our ability to continue to deliver profitable results in a challenging dry bulk sector. Our focus on efficiency and our disciplined approach to generating revenues coupled with a commitment to delivering unmatched service to our global clients, who rely on us to solve their most difficult logistical challenges, remain the foundation of our Company. We are confident that our unique business model and best-in-class execution will continue to serve us well.”
|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 September 30, 2015
The Company reported net income of $3.0 million, or $0.08 per common share, for the third quarter of 2015, compared to a net loss of $2.9 million, or $0.08 per common share on a pro forma basis, in the third quarter of 2014. Adjusted EBITDA rose 575% to $8.1 million from $1.2 million. This improvement was primarily attributable to Pangaea’s improved operating margin, which rose to 6.8% from negative 2.1% as the Company continued to focus on profitable voyage revenue from contracts of affreightment and benefited from declining bunker and charter-in costs during the period.
Total revenue of $71.2 million for the quarter ended September 30, 2015 decreased 22% from the $91.2 million generated in the same quarter in 2014 and comprised $64.6 million in voyage revenue and $6.6 million in charter revenue, year-over-year decreases of 20% and 38%, respectively.
Specifically, the decline in total revenue was primarily attributable to a 16% decrease in the Company’s total shipping days from 4,099 days in the third quarter of 2014 to 3,443 days in the third quarter of 2015. Total shipping days are the sum of voyage days, which are tied to COAs and decreased 11% year-over-year, and charter days, which are subject to market rates and decreased 34% year-over-year. The Company strategically limited its exposure to declining rates by chartering in vessels only to meet the demands of specific voyage contracts in order to maximize profitability and reduce risk. Voyage and charter expenses declined more than revenue, with year-over-year decreases of 35% and 40% respectively, leading to the aforementioned improvement in operating margin.
Coll noted, “During the third quarter we continued to execute on the strategy that has enabled us to deliver profits for shareholders during a challenging 2015: focusing on profitable trades tied to COAs, leveraging our expertise in backhaul and vessel positioning to minimize idle time, limiting our exposure to uncovered long vessel positions, controlling costs, improving efficiencies, and working to selectively add attractive pieces of business from new and existing clients.”
Mr. Coll commented about the dry bulk shipping market in general, “The limited growth in commodities shipping activity and the ongoing delivery of newbuildings to the global dry bulk fleet leads us to believe that the rate environment will continue to be challenged for some time. We believe Pangaea, with its ‘cargo-first’ emphasis and flexible ‘asset-right’ strategy, is better positioned to weather the storm of too many ships chasing too few cargoes than many of our competitors whose strategies are asset heavy and burdened with large fixed costs. Our nimbleness allows us to optimize our activities to meet changing conditions and positions us to continue to outperform the industry in a variety of rate environments, including the currently muted one.”
In October, 2015, Pangaea acquired the remaining non-controlling interest in Nordic Bulk Carriers AS (“NBC”), making NBC a wholly-owned subsidiary of Pangaea.
Cash and cash equivalents were $34.2 million as of September 30, 2015, compared with $29.8 million on December 31, 2014.
For the nine months ended September 30, 2015, the Company’s net cash provided by operating activities was $18.0 million, compared to $12.5 million for the year to date ended September 30, 2014.
For the nine months ended September 30, 2015 and 2014, net cash used in investing activities was $40.9 million and $26.2 million, respectively. Net cash provided by financing activities was $27.3 million and $14.9 million for the nine months ended September 30, 2015 and 2014, respectively. These increases reflect the Company’s 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 and the m/v Bulk Discovery. The Company also used cash available from operating earnings to pay off its corporate credit line of $3 million.
Conference Call Details
The Company’s management team will host a conference call to discuss the Company’s financial results tomorrow, November, 13, 2015 at 8:00 a.m., Eastern Time (ET). Following a recorded discussion of the quarterly results, Edward Coll, Chairman and Chief Executive Officer, and Anthony Laura, Chief Financial Officer, will be available to answer questions from attending participants. 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# 75101707.
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 one week and can be accessed by calling (800) 585-8367 (domestic) or (404) 537-3406 (international) and referencing ID# 97471493.
|Pangaea Logistics Solutions Ltd.|
|Consolidated Statements of Income (unaudited)|
|Three months ended September 30,|
|Charter hire expense||20,601,908||34,315,719|
|Vessel operating expenses||8,462,370||7,935,565|
|General and administrative||3,595,398||2,790,350|
|Depreciation and amortization||3,195,437||3,118,973|
|(Gain) / Loss on sale of vessels||71,882||(1,661,368||)|
|Income from operations||4,868,752||(1,892,204||)|
|Other income (expense):|
|Interest expense, net||(1,493,536||)||(1,348,252||)|
|Interest expense related party debt||(110,764||)||(108,422||)|
|Imputed interest on related party long-term debt||-||-|
|Unrealized gain (loss) gain on derivative instruments||(513,678||)||(551,354||)|
|Other income (expense)||30,000||83,803|
|Total other expense, net||(2,087,978||)||(1,924,225||)|
|(Loss) Income attributable to noncontrolling interests||221,895||906,822|
|Net income attributable to Pangaea Logistics Solutions Ltd.||$||3,002,669||$||(2,909,607||)|
|Earnings per common share:|
|Basic and diluted||$||0.08||$||(0.42||)|
|Weighted average shares used to compute earnings|
|per common share|
|Basic and diluted||35,490,097||13,421,955|
|Pangaea Logistics Solutions Ltd.|
|Consolidated Balance Sheets|
|September 30,||December 31,|
|Cash and cash equivalents||$||34,201,299||$||29,817,507|
Accounts receivable (net of allowance of $4,542,781 at
|Advance hire, prepaid expenses and other current assets||3,525,542||6,568,234|
|Vessels held for sale, net||-||4,523,804|
|Total current assets||73,212,359||84,873,420|
|Fixed assets, net||263,117,007||207,667,613|
|Investment in newbuildings in-process||18,766,477||38,471,430|
|Other noncurrent assets||836,112||1,450,802|
Liabilities, convertible redeemable preferred stock
|Accounts payable, accrued expenses and other current liabilities||$||23,436,236||$||40,201,794|
|Related party debt||62,902,322||59,102,077|
|Current portion long-term debt||18,136,172||17,807,674|
|Line of credit||-||3,000,000|
Total current liabilities
|Secured long-term debt, net||115,220,158||87,430,416|
|Related party long-term debt, net||-||-|
|Commitments and contingencies|
Preferred stock, $0.0001 par value, 1,000,000 shares
Common stock, $0.0001 par value, 100,000,000 shares authorized
|Additional paid-in capital||134,327,959||133,955,445|
|Total Pangaea Logistics Solutions Ltd. equity||112,805,233||97,816,194|
|Total stockholders' equity||118,042,578||100,347,553|
|Total liabilities and stockholders' equity||$||355,931,955||$||332,463,265|
|Pangaea Logistics Solutions Ltd.|
|Consolidated Statements of Cash Flows|
|Nine months ended September 30|
|Net (loss) income||$||18,140,297||$||4,579,040|
Adjustments to reconcile net (loss) income to net cash
|Depreciation and amortization expense||9,457,269||8,415,174|
|Amortization of deferred financing costs||591,444||627,961|
|Unrealized loss (gain) on derivative instruments||(672,873||)||2,123,246|
|Loss (income) from equity method investee||(61,357||)||-|
|Provision for doubtful accounts||453,421||(385,010||)|
|(Gain)/Loss on sales of vessels||638,638||(3,947,600||)|
|Write off unamortized financing costs of repaid debt||25,557||241,522|
|Amortization of discount on related party long-term debt||-||322,947|
|Change in operating assets and liabilities:|
|Advance hire, prepaid expenses and other current assets||3,006,412||1,770,164|
|Other non-current assets||-||(236,223||)|
Account payable, accrued expenses and
|Net cash provided by operating activities||18,025,572||12,469,362|
|Purchase of vessels||(44,795,804||)||(38,288,452||)|
|Proceeds from sales of vessels||8,265,179||23,279,387|
|Deposits on newbuildings in-process||(3,470,000||)||(6,960,499||)|
|Purchase of building and equipment||(59,380||)||(558,376||)|
|Purchase from non-controlling interest||(250,000||)|
|Net cash used in investing activities||(40,953,004||)||(26,167,617||)|
|Proceeds of related party debt||4,680,001||4,750,000|
|Payments on related party debt||(1,216,250||)||(54,507||)|
|Proceeds from long-term debt||46,000,000||35,500,000|
|Payments of financing and issuance costs||(928,201||)||(366,800||)|
|Payments on long-term debt||(17,602,405||)||(24,800,657||)|
|Payments on line of credit||(3,000,000||)||-|
|Common stock dividends paid||(100,000||)||(100,000||)|
Distributions from non-controlling interest
|Net cash provided by financing activities||27,311,225||14,928,036|
|Net increase (decrease) in cash and cash equivalents||4,383,792||1,229,781|
|Cash and cash equivalents at beginning of period||29,817,507||18,927,927|
|Cash and cash equivalents at end of period||$||34,201,299||$||20,157,708|
|Pangaea Logistics Solutions Ltd.|
|Reconciliation of Adjusted EBITDA and Pro Forma Adjusted Earnings Per Share|
|Three months ended September 30,|
|Income from operations||$||4,869||$||(1,892||)|
|Depreciation and amortization||3,195||3,119|
Earnings Per Common Share
|Net Income attributable to Pangaea Logistics Solutions Ltd.||3,003||—|
|Net Income attributable to Bulk Partners (Bermuda) Ltd.||—||(2,910||)|
|less adjustments related to pre-merger capital structure||—||(2,739||)|
|Total earnings allocated to common stock||$||3,003||$||(5,649||)|
|Weighted average number of common shares outstanding||35,490,097||13,421,955|
|Earnings per common share||$||0.08||$||(0.42||)|
Pro Forma Adjusted EPS
|Total Income allocated to common stock||3,003||(5,649||)|
|plus adjustments related to pre-merger capital structure||—||2,739|
|Non-GAAP Pro forma adjusted total earnings allocated to common stock||$||3,003||$||(2,910||)|
|Non-GAAP Pro forma weighted average number of common shares outstanding||35,490,097||34,696,997|
|Non-GAAP Pro forma Adjusted EPS||$||0.08||$||(0.08||)|
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.