Company Reports Profitable First Quarter and
Strong Demand For Services
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 Flows
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, 2015 2014
(unaudited) (unaudited) Revenues: Voyage
revenue
$90,578,942 $91,559,529 Charter revenue
4,536,846 22,653,349
95,115,788
114,212,878 Expenses: Voyage expense
45,324,119 48,134,606
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
- Total expenses
85,166,996 104,153,074
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
823,455 (371,558) Other income (expense)
83,149
(150,000) Total other expense, net
(619,133)
(2,402,512) Net income
9,329,659 7,657,292 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: Basic
$0.22 $0.17
Diluted
$0.22 $0.17 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 March 31,
December 31,
2015 2014
Assets (unaudited) Current Assets
Cash and cash equivalents
$42,598,816 $29,817,507 Restricted
cash
1,000,000 1,000,000 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 Bunker inventory
13,792,771 15,601,659 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
Total assets $369,320,508
$332,463,265
Liabilities and stockholders' equity
Current liabilities Accounts payable, accrued expenses and other
current liabilities
$28,656,068 $40,201,794 Related party
debt
61,723,711 59,102,077 Deferred revenue
8,284,176
11,748,926 Current portion long-term debt
22,359,868
17,807,674 Line of credit
3,000,000 3,000,000 Dividend
payable
12,724,825 12,824,825 Total current liabilities
136,748,648 144,685,296 Secured long-term debt, net
122,728,090 87,430,416 Commitments and contingencies
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
34,756,980 shares issued and outstanding
at March 31, 2015 and December 31, 2014
3,476 3,476 Additional paid-in capital
134,122,003
133,955,445 Accumulated deficit
(28,542,798) (36,142,727)
Total Pangaea Logistics Solutions Ltd. equity
105,582,681 97,816,194 Non-controlling interests
4,261,089 2,531,359 Total stockholders' equity
109,843,770 100,347,553
Total liabilities and
stockholders' equity $369,320,508
$332,463,265
Pangaea Logistics Solutions Ltd.
Consolidated Statements of Cash Flows Three months
ended March 31, 2015 2014
(unaudited)
(unaudited)
Operating activities Net income
$9,329,659 $7,657,292
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 Share-based compensation
166,558 -
Change in operating assets and
liabilities:
Accounts receivable
7,477,051
20,364,070
Bunker inventory
1,808,888
879,826
Advance hire, prepaid expenses and other current assets
3,863,659
2,577,048
Account payable, accrued expenses and other current liabilities
(10,771,168)
(14,936,544)
Deferred revenue
(3,464,750)
(9,708,056)
Net cash provided by operating activities
11,183,423
10,438,052
Investing activities Purchase of vessels
(44,824,665) (14,382,779) Proceeds from sales of vessels
4,523,804 - Deposits on newbuildings in-process
-
(63,953) Drydocking costs
- (409,000) Purchase of building
and equipment
(5,399) (3,612) Net cash used in investing
activities
(40,306,260) (14,859,344)
Financing
activities 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
-
$2,101,207 Imputed interest on related party long-term debt
-
$200,802 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, 2015 2014
Adjusted
EBITDA
(unaudited) (unaudited) Income from operations
$9,949 $10,060 Depreciation and amortization
2,991
2,552 Adjusted EBITDA
$12,940 $12,612
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
-
(4,317)
Total earnings allocated to common stock
$7,560
$2,276
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
$2,276
Non-GAAP plus adjustments related to pre-merger capital structure
-
4,317
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.
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.
Investor Relations:Prosek PartnersThomas Rozycki,
212-279-3115 ext. 208trozycki@prosek.com
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