Pangaea Logistics Solutions Ltd. Reports Financial Results for the Quarter Ended September 30, 2020

NEWPORT, R.I., Nov. 11, 2020 /PRNewswire/ -- 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 ended September 30, 2020.

3rd Quarter Highlights

    --  Net income attributable to Pangaea Logistics Solutions Ltd. was $7.6
        million for three months ended September 30, 2020 as compared to $8.3
        million of net income for the same period of 2019.
        --  Non-GAAP adjusted net income attributable to Pangaea Logistics
            Solutions Ltd. of $8.1 million as compared to $8.6 million for the
            three months ended September 30, 2019.
    --  Diluted net income per share was $0.17 for three months ended September
        30, 2020 as compared to earnings per share of $0.19 for the same period
        of 2019.
    --  Pangaea's TCE rates were $13,316 for the three months ended September
        30, 2020 and $15,915 for the three months ended September 30, 2019. The
        market average for the third quarter of 2020 was approximately $10,286,
        giving the Company an overall average premium over market rates of
        approximately $3,030 or 29%.
    --  Adjusted EBITDA of $15.1 million for the three months ended September
        30, 2020, compared to $18.0 million for the same period of 2019.
    --  At the end of the quarter, Pangaea had $48.1 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.
        (NBHC), which owns six modern 1-A ice-class panamax bulk vessels,
        increasing its equity interest to 66.7%.

Ed Coll, Chief Executive Officer of Pangaea Logistics Solutions, commented:

"The third quarter was an active one for us from an operating and investing perspective. We deployed our industry leading ice class capabilities to meet our clients' needs during the summer arctic shipping season. Our operating fleet expanded from an average of 40 ships in the second quarter to 52 ships in the third quarter, which shows our unique chartering strategy in practice as we limited our exposure to turbulent markets by redelivering vessels earlier in the year and replacing them when needed to meet client demand. Our achieved TCE continued to outperform the market average by 29%. Furthermore, as we previously announced, we increased our ownership in our six ice-class 1A panamax vessels from 33% to 67%, solidifying our position in the strategically important ice class sector. We took additional steps to reduce the average age of our fleet as we completed the sale of the m/v Bulk Beothuk in the 3rd quarter."

Mr. Coll added, "Collectively we are encouraged by the steps we've taken as we focus on niches where we add value and in turn enhance shareholder value. Furthermore, as we look ahead, we continue to watch the rapidly changing conditions caused by COVID-19, from changes to our working environment to rotating crews aboard our vessels. We again extend our sincere gratitude to our people and their families for the hardships they are facing, ashore and aboard our vessels. Our results year over year remain strong. In the longer term we are encouraged by the decline in newbuilding orders and its impact on the dry bulk industry, however we expect, and have prepared for, continued uncertainty in our markets over the next few quarters."

Results for the three months ended September 30, 2020 and 2019

Total revenue was $103.8 million for the three months ended September 30, 2020, compared with $118.9 million for the three months ended September 30, 2019. The 13% decrease in revenues was mainly attributed to the decrease in the average time charter rates achieved by our vessels during the third quarter of 2020 compared to the same period in 2019.

Time Charter Equivalent rate (TCE) was $13,316 per day for the three months ended September 30, 2020, compared to an average of $15,915 per day for the same period in 2019. However, the achieved premium over the average market TCE rate increased by $3,030 per day or 29% for the three months ended September 30, 2020 compared to 16% in the same period in 2019. The total number of shipping days remained relatively consistent with a 2% increase to 4,734 days in the three months ended September 30, 2020, compared to 4,636 for the same period in 2019, predominantly due to the increase in voyage days.

Liquidity and Cash Flows

Cash, restricted cash and cash equivalents were $48.1 million as of September 30, 2020, compared with $53.1 million on December 31, 2019.

At September 30, 2020 and December 31, 2019, the Company had working capital of $17.3 million and $37.1 million, respectively. Net cash provided by operating activities during the nine months ended September 30, 2020 was $22.4 million compared to net cash provided by operating activities of $23.4 million for the nine months ended September 30, 2019.

Net cash used in investing activities during the nine months ended September 30, 2020 and 2019 was $6.0 million and $48.2 million, respectively. During the nine months ended September 30, 2020, the Company received sale proceeds of $11.7 million from the sale of three vessels and paid $15.0 million for the acquisition of an additional one-third interest in NBHC.

Net cash used in financing activities during the nine months ended September 30, 2020 was $21.4 million compared to net cash provided by financing activities of $5.3 million during the same period of 2019. The Company exercised an early buy-out of one of its finance leases for a purchase price of $5.5 million during the nine months ended September 30, 2020 compared to proceeds received of $14.0 million from a finance lease during the same period of 2019.

Subsequent Event

NBHC Loan Refinancing

On November 2, 2020, NBHC signed a nonbinding term sheet with a new lender pursuant to which the new lender has proposed to provide NBHC a loan for up to $18.0 million with a term of 84 months at an interest rate of 2.95% per annum. The borrower will make 28 quarterly payments in arrears followed by one final installment of $4.4 million payable on the 7(th) anniversary of the drawdown date, no later than December 31, 2020. The Loan would be secured by a first lien on m/v Nordic Odyssey and m/v Nordic Orion. The Company intends to use a portion of the proceeds of the loan to repay the outstanding balance of $10.6 million for the Nordic Odyssey and Nordic Orion loan facilities which matures on December 31, 2020.

Conference Call Details

The Company's management team will host a conference call to discuss the Company's financial results on November 12, 2020 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#5847439.

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 two weeks and can be accessed by calling (855) 859-2056 (domestic) or (404) 537-3406 (international) and referencing ID#5847439.


                                                                                  
            
              Pangaea Logistics Solutions Ltd.

                                                                                 
            
              Consolidated Statements of Income

                                                                                                  
            (unaudited)




                                                                          Three Months Ended September 30,                                          Nine Months Ended September 30,


                                                           2020                                                  2019                                2020                             2019

                                                                                                                                                                                    ---


            Revenues:



            Voyage revenue                                     $
         
              98,120,344                                           $
          103,806,391                                 $
          
         251,501,401  $
         247,087,805



            Charter revenue                          5,646,214                                              15,079,005                                        18,541,264                                  34,632,391




            Total revenue                          103,766,558                                             118,885,396                                       270,042,665                                 281,720,196



            Expenses:



            Voyage expense                          40,729,271                                              45,102,602                                       120,283,093                                 114,501,121



            Charter hire expense                    34,969,551                                              41,980,065                                        82,498,729                                  85,244,779



            Vessel operating expense                 9,699,890                                              11,331,770                                        28,958,812                                  32,160,692



            General and administrative               3,691,963                                               2,768,253                                        11,557,594                                  12,160,924



            Depreciation and amortization            4,230,302                                               4,652,563                                        12,818,260                                  13,521,078



            Loss on impairment of vessels                    -                                                                                               1,801,039



            Loss on sale of vessels                    485,580                                                                                                  705,065




            Total expenses                          93,806,557                                             105,835,253                                       258,622,592                                 257,588,594





            Income from operations                   9,960,001                                              13,050,143                                        11,420,073                                  24,131,602





            Other (expense) income:



            Interest expense, net                  (1,956,729)                                             (2,499,617)                                       (6,073,599)                                 (6,807,837)



            Interest expense on related party debt           -                                               (10,902)                                                                                    (48,938)



            Unrealized gain (loss) on derivative      (18,098)                                              (301,058)                                      (1,530,875)                                   2,203,899
    instruments, net



            Other income                               301,543                                                 180,194                                           996,734                                     580,106




            Total other (expense), net             (1,673,284)                                             (2,631,383)                                       (6,607,740)                                 (4,072,770)





            Net income                               8,286,717                                              10,418,760                                         4,812,333                                  20,058,832



            Income attributable to non-controlling   (734,472)                                            (2,097,200)                                       (1,050,287)                                 (4,002,217)
    interests




            Net income attributable to Pangaea                  $
         
              7,552,245                                             $
          8,321,560                                   $
          
         3,762,046   $
         16,056,615
    Logistics Solutions Ltd.






            Earnings per common share:



            Basic                                                  $
           
              0.17                                                $
            0.19                                      $
         
            0.09      $
            0.38




            Diluted                                                $
           
              0.17                                                $
            0.19                                      $
         
            0.09      $
            0.37






            Weighted average shares used to
    compute earnings per common share:



            Basic                                   43,488,241                                              42,817,933                                        43,393,764                                  42,729,775




            Diluted                                 43,510,961                                              43,354,742                                        43,398,472                                  43,247,417


                                                                                             
       
       Pangaea Logistics Solutions Ltd.

                                                                                               
       
        Consolidated Balance Sheets




                                                                                                                                      September 30,                    December 31,
                                                                                                                                               2020                         2019

                                                                                                                                                                            ---

                                                                                                                                       (unaudited)



              
                Assets



              Current assets



              Cash and cash equivalents                                                                                                             $
      
      45,558,951               $
      50,555,091



              Restricted cash                                                                                                            1,500,000                      1,000,000



              Accounts receivable (net of allowance of $1,697,961 and $1,908,841 at                                                     19,938,892                     28,309,402
    September 30, 2020 and December 31, 2019, respectively)



              Bunker inventory                                                                                                          16,232,580                     21,001,010



              Advance hire, prepaid expenses and other current assets                                                                   22,422,135                     18,770,825



              Vessel held for sale                                                                                                               -                     8,319,152




              Total current assets                                                                                                     105,652,558                    127,955,480





              Restricted cash                                                                                                            1,000,000                      1,500,000



              Fixed assets, net                                                                                                        275,616,572                    281,474,857



              Investment in newbuildings in-process                                                                                     15,390,635                     15,357,189



              Finance lease right of use assets, net                                                                                    45,732,947                     53,615,305




              
                Total assets                                                                                                            $
      
      443,392,712              $
      479,902,831






              
                Liabilities and stockholders' equity



              Current liabilities



              Accounts payable, accrued expenses and other current liabilities                                                                      $
      
      39,092,634               $
      39,973,635



              Related party debt                                                                                                           242,852                        332,987



              Deferred revenue                                                                                                          10,387,175                     14,376,394



              Current portion of secured long-term debt                                                                                 31,619,969                     22,990,674



              Current portion of finance lease liabilities                                                                               6,952,635                     12,549,208



              Dividend payable                                                                                                              99,127                        631,961




              Total current liabilities                                                                                                 88,394,392                     90,854,859





              Secured long-term debt, net                                                                                               65,513,329                     83,649,717



              Finance lease liabilities, net                                                                                            52,277,654                     57,498,217



              Long-term liabilities - other                                                                                             10,062,268                      4,828,364



              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; 45,065,662                                                     4,507                          4,489
    shares issued and outstanding at September 30, 2020; 44,886,122 shares issued
    and outstanding at December 31, 2019



              Additional paid-in capital                                                                                               159,265,939                    157,504,895



              Retained earnings                                                                                                         16,498,626                     12,736,580




              
                Total Pangaea Logistics Solutions Ltd. equity                                                               175,769,072                    170,245,964



              Non-controlling interests                                                                                                 51,375,997                     72,825,710




              Total stockholders' equity                                                                                               227,145,069                    243,071,674




              
                Total liabilities and stockholders' equity                                                                              $
      
      443,392,712              $
      479,902,831


                                                                                          
        
        Pangaea Logistics Solutions Ltd.

                                                                                        
       
        Consolidated Statements of Cash Flows

                                                                                              
      
                (unaudited)




                                                                                                                                                           Nine Months Ended September 30,


                                                                                                                                               2020                                               2019

                                                                                                                                                                                                  ---


     
                Operating activities



     Net income                                                                                                                                     $
      
              4,812,333                                $
     20,058,832



     Adjustments to reconcile net income to net cash (used in) provided by operations:



     Depreciation and amortization expense                                                                                              12,818,260                                           13,521,078



     Amortization of deferred financing costs                                                                                              513,092                                              538,427



     Amortization of prepaid rent                                                                                                           91,704                                               88,948



     Unrealized loss (gain) on derivative instruments                                                                                    1,530,875                                          (2,203,899)



     Income from equity method investee                                                                                                (1,097,531)                                           (416,435)



     Earnings attributable to non-controlling interest recorded as interest expense                                                        104,662



     Recovery for doubtful accounts                                                                                                       (45,661)                                            (47,351)



     Loss on impairment of vessels                                                                                                       1,801,039



     Loss on sale of vessel                                                                                                                705,065



     Drydocking costs                                                                                                                  (3,112,910)                                         (1,561,689)



     Share-based compensation                                                                                                            1,915,188                                            1,365,968



     Change in operating assets and liabilities:



     Accounts receivable                                                                                                                 8,416,171                                            (692,306)



     Bunker inventory                                                                                                                    4,768,430                                            2,219,986



     Advance hire, prepaid expenses and other current assets                                                                           (2,553,779)                                        (15,220,967)



     Accounts payable, accrued expenses and other current liabilities                                                                  (4,236,385)                                           6,171,148



     Deferred revenue                                                                                                                  (3,989,219)                                           (419,835)




     Net cash provided by operating activities                                                                                          22,441,334                                           23,401,905





     
                Investing activities



     Purchase of vessels and vessel improvements                                                                                       (2,072,496)                                        (40,201,356)



     Investment in newbuildings in-process                                                                                                (33,446)                                         (7,691,522)



     Purchase of fixed assets and equipment                                                                                                      -                                           (293,385)



     Acquisition of non-controlling interest                                                                                          (15,000,000)



     Proceeds from sale of vessels                                                                                                      11,691,507



     Purchase of derivative instrument                                                                                                   (628,000)




     Net cash provided by (used in) investing activities                                                                               (6,042,435)                                        (48,186,263)





     
                Financing activities



     Proceeds from long-term debt                                                                                                                -                                          14,000,000



     Payments of related party debt                                                                                                              -                                         (1,681,063)



     Payments of financing fees and issuance costs                                                                                       (167,984)                                           (646,538)



     Payments of long-term debt                                                                                                        (9,852,201)                                        (17,343,675)



     Proceeds from finance leases                                                                                                                -                                          25,600,000



     Dividends paid to non-controlling interests                                                                                                 -                                         (4,666,665)



     Payments of finance lease obligations                                                                                            (10,817,136)                                          (4,678,761)



     Accrued common stock dividends paid                                                                                                 (532,834)                                         (5,242,613)



     Cash paid for incentive compensation shares relinquished                                                                            (154,126)



     Contributions from non-controlling interest recorded as long-term liability                                                           322,750



     Payments to non-controlling interest recorded as long-term liability                                                                (193,508)




     Net cash (used in) provided by financing activities                                                                              (21,395,039)                                            5,340,685





     Net decrease in cash, cash equivalents and restricted cash                                                                        (4,996,140)                                        (19,443,673)



     Cash, cash equivalents and restricted cash at beginning of period                                                                  53,055,091                                           56,114,735




     Cash, cash equivalents and restricted cash at end of period                                                                                   $
      
              48,058,951                                $
     36,671,062






     
                Supplemental cash flow information



     Cash and cash equivalents                                                                                                                     $
      
              45,558,951                                $
     34,171,062



     Restricted cash                                                                                                                     2,500,000                                            2,500,000



                                                                                                                                                    $
      
              48,058,951                                $
     36,671,062






     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)




                                                                                                 Three Months Ended September 30,                                 Nine Months Ended September 30,


                                                                                 2020                                                  2019                              2020                     2019




              
                Net Transportation and Service Revenue



              Gross Profit                                                14,183,087                                              15,850,171                                     25,620,946                        36,396,012



              Add:



              Vessel Depreciation and Amortization                         4,184,759                                               4,620,788                                     12,681,085                        13,417,592




              Net transportation and service revenue                                 $
          
              18,367,846                                    $
     
             20,470,959                         $
         
        38,302,031  $
     
          49,813,604






              
                
                  Adjusted EBITDA



              Income from operations                                                  $
          
              9,960,001                                        $
           13,050,143                         $
         
        11,420,073      $
        24,131,602



              Depreciation and amortization                                4,230,302                                               4,652,563                                     12,818,260                        13,521,078



              Loss on impairment of vessels                                                                                                                                     1,801,039



              Loss on sale of vessel                                         485,580                                                                                               705,065



              Share-based compensation                                       391,702                                                 320,462                                      1,915,188                         1,365,969




              Adjusted EBITDA                                                        $
          
              15,067,585                                        $
           18,023,168                         $
         
        28,659,625      $
        39,018,649






              
                
                  Earnings Per Common Share



              Net income (loss) attributable to Pangaea Logistics                     $
          
              7,552,245                                         $
           8,321,560                          $
         
        3,762,046      $
        16,056,615
    Solutions Ltd.






              Weighted average number of common shares                    43,488,241                                              42,817,933                                     43,393,764                        42,729,775
    outstanding - basic




              Weighted average number of common shares                    43,510,961                                              43,354,742                                     43,398,472                        43,247,417
    outstanding - diluted






              Earnings per common share - basic                                          $
          
                0.17                                            $
             0.19                             $
        
           0.09         $
           0.38




              Earnings per common share - diluted                                        $
          
                0.17                                            $
             0.19                             $
        
           0.09         $
           0.37






              
                
                  Adjusted EPS



              Net Income attributable to Pangaea Logistics Solutions Ltd.             $
          
              7,552,245                                         $
           8,321,560                          $
         
        3,762,046      $
        16,056,615



              Non-GAAP



              Add: loss on sale of vessels                                   485,580                                                                                               705,065



              Loss on impairment of vessels                                                                                                                                     1,801,039



              Unrealized (gain) loss on derivative instruments                18,098                                                 301,058                                      1,530,875                       (2,203,899)




              Non-GAAP adjusted net income (loss) attributable to                     $
          
              8,055,923                                         $
           8,622,618                          $
         
        7,799,025      $
        13,852,716
    Pangaea Logistics Solutions Ltd.






              Weighted average number of common shares - basic            43,488,241                                              42,817,933                                     43,393,764                        42,729,775




              Weighted average number of common shares - diluted          43,510,961                                              43,354,742                                     43,398,472                        43,247,417






              Adjusted EPS - basic                                                       $
          
                0.19                                            $
             0.20                             $
        
           0.18         $
           0.32




              Adjusted EPS - diluted                                                     $
          
                0.19                                            $
             0.20                             $
        
           0.18         $
           0.32

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-GAAP net revenue and non-GAAP adjusted EBITDA. This is considered a non-GAAP financial measure 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.

Gross Profit. Gross profit represents total revenue less net transportation and service revenue and less vessel depreciation and amortization.

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, stock-based compensation 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 during the period 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.

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 at www.sec.gov.

View original content to download multimedia:http://www.prnewswire.com/news-releases/pangaea-logistics-solutions-ltd-reports-financial-results-for-the-quarter-ended-september-30-2020-301171320.html

SOURCE Pangaea Logistics Solutions Ltd.