NEWPORT, R.I., May 10,
2017 /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 March 31,
2017.
1st Quarter Highlights
- Net income attributable to Pangaea of $1.3 million for the quarter, even as the Company
recorded a nonrecurring loss on the sale and simultaneous
charterback1 of the m/v Bulk Destiny ("Bulk
Destiny").
- Pangaea's TCE rates increased 12% and total shipping days
increased 52% due to moderate growth in the drybulk market and an
increase in drybulk market rates.
- At the end of the quarter, Pangaea had $21.7 million in unrestricted cash and cash
equivalents.
Results for the three months ended March 31, 2017
For the first quarter of 2017, the Company reported net income
of $1.3 million, up from net income
of $1.2 million in the first quarter
of 2016. Net income includes a $4.3
million loss on sale and leaseback of vessel, of which 50%
was allocated to noncontrolling interest to arrive at net income
attributable to the Company. There was no such loss in the
comparable period of 2016. The market achieved moderate improvement
in the first quarter as compared to the same period of 2016,
evidenced by the increase in total revenue to $84.5 million for the three months ended
March 31, 2017, compared to
$43.9 million for the three months
ended March 31, 2016, as an increase
in demand helped push total shipping days up 52% to 4,342 in the
three months ended March 31, 2017,
compared to 2,863 for the same period in 2016. However,
increasing bunker prices and charter-hire rates, which began to
rise late in the third quarter of 2016, continued to put pressure
on margins in the first quarter of 2017. Adjusted
EBITDA2 was $7.9 million,
compared with $7.0 million for the
first quarter of 2016.
Pangaea's cargo-focused, business model is founded on a mix of
short and long term backhaul cargo charters. Pangaea matches
these charters with a fleet of owned and chartered-in
tonnage. When the Company contracts for future cargo service,
the Company uses freight forward agreements to limit exposure to
intervening shifts in rates and secure margins. Use of these FFAs
and bunker fuel swaps in the first quarter of 2017 resulted in a
net unrealized gain on derivative instruments of $2.0 million as compared to a net unrealized loss
of $0.3 million in the first quarter
of 2016.
During the quarter Company acquired its joint venture
partner's interest in Nordic Bulk Ventures Holding Company Ltd.
("BVH")3 in January 2017.
BVH owns Bulk Destiny and m/v Bulk Endurance through wholly-owned
subsidiaries. BVH is wholly-owned by the Company after the
acquisition.
Edward Coll, Chairman and Chief
Executive Officer of Pangaea, commented, "Our strong first quarter
results illustrate the upward momentum we're beginning to see
within our industry. When excluding the sale and charterback of
Bulk Destiny, a non-recurring item that impacted our final results
for the quarter, we reported stronger operating profit across our
platform.
Our operating fleet grew by 20 ships during the quarter, and we
moved from short trip charters-in to longer term
employment. Total shipping days increased by 52% , and
our average timecharter equivalent grew by $1,055 per day. These achievements were largely
driven by the performance of our ice vessels and broader market
improvements. Pangaea's owned fleet, including two ships bareboat
chartered-in, grew by five ships from Q1 2016 through Q1 2017."
Mr. Coll commented about the Company's strategy and operations,
"We feel we are poised for continued strengthening of the
underlying market for our business. We see more opportunities
to expand our involvement in key focus areas such as ice and
contracted cargo, and believe this will help advance our ultimate
goal of achieving strong performance which maximizes shareholder
value."
Cash Flows
Cash and cash equivalents were $21.7
million as of March 31, 2017,
compared with $22.3 million on
December 31, 2016.
For the three months ended March 31,
2017, the Company's net cash provided by operating
activities was $2.4 million, compared
to $4.1 million for the three months
ended March 31, 2016.
For the three months ended March 31,
2017 and 2016, net cash used in investing activities was
$17.7 million and $0.3 million, respectively. Net cash
provided by financing activities was $14.7
million for the three months ended March 31, 2017 and net cash used for financing
activities was $8.7 million for the
three months ended March 31,
2016. These changes reflect the Company's investment in and
purchase of new ice-class ships, including the Bulk Destiny,
which was financed under a sale and leaseback arrangement; and the
m/v Bulk Endurance, which was financed under a commercial loan
facility.
Conference Call Details
The Company's management team will host a conference call
to discuss the Company's financial results on May 11, 2017 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# 19144375.
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 (800) 585-8367 (domestic) or (404)
537-3406 (international) and referencing ID# 19144375.
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1
|
Accounted for as a
capital lease under US Generally Accepted Accounting
Principles.
|
2
|
Adjusted EBITDA is a
non-GAAP measure and represents income or loss from operations
before depreciation and amortization, loss on sale and leaseback of
vessel and, when applicable, loss on impairment of vessels and
certain non-recurring items. See Reconciliation of Adjusted
EBITDA and Adjusted Earnings Per Share.
|
3
|
Accounting
adjustments related to the Company's purchase of its joint venture
partner's interest in BVH, and for sale of Bulk Destiny to a third
party and the simultaneous charterback of the vessel include:
conversion of $9.3 million of joint venture debt issued by the
joint venture company to its shareholders into common shares of
NBVH; adjustment of the acquisition cost of Bulk Destiny, to
fair market value at the time of sale of the vessel to the third
party; recording of 50% of the fair market value accounting
adjustment for the account of the joint venture partner; and,
reflecting BVH as a wholly owned subsidiary of Pangaea.
|
Pangaea Logistics
Solutions Ltd.
|
Consolidated
Statements of Income
|
|
|
Three Months Ended
March 31,
|
|
2017
|
|
2016
|
|
|
|
|
Revenues:
|
|
|
|
Voyage
revenue
|
$
|
77,688,449
|
|
|
$
|
41,974,319
|
|
Charter
revenue
|
6,766,672
|
|
|
1,963,200
|
|
|
84,455,121
|
|
|
43,937,519
|
|
Expenses:
|
|
|
|
Voyage
expense
|
41,271,919
|
|
|
18,500,882
|
|
Charter hire
expense
|
23,201,155
|
|
|
8,503,174
|
|
Vessel operating
expense
|
8,591,243
|
|
|
6,889,082
|
|
General and
administrative
|
3,514,764
|
|
|
3,036,371
|
|
Depreciation and
amortization
|
3,941,795
|
|
|
3,515,456
|
|
Loss on sale and
leaseback of vessel
|
4,289,998
|
|
|
—
|
|
Total
expenses
|
84,810,874
|
|
|
40,444,965
|
|
|
|
|
|
(Loss) income from
operations
|
(355,753)
|
|
|
3,492,554
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
Interest expense,
net
|
(1,630,988)
|
|
|
(1,369,613)
|
|
Interest expense on
related party debt
|
(77,979)
|
|
|
(80,490)
|
|
Unrealized gain
(loss) on derivative instruments, net
|
1,966,387
|
|
|
(335,959)
|
|
Other income
(expense)
|
94,650
|
|
|
(102,318)
|
|
Total other income
(expense), net
|
352,070
|
|
|
(1,888,380)
|
|
|
|
|
|
Net (loss)
income
|
(3,683)
|
|
|
1,604,174
|
|
Loss (income)
attributable to non-controlling interests
|
1,350,525
|
|
|
(407,070)
|
|
Net income
attributable to Pangaea Logistics Solutions Ltd.
|
$
|
1,346,842
|
|
|
$
|
1,197,104
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
Basic
|
$
|
0.04
|
|
|
0.03
|
|
Diluted
|
$
|
0.04
|
|
|
0.03
|
|
|
|
|
|
Weighted average
shares used to compute earnings
|
|
|
|
per common
share
|
|
|
|
Basic
|
35,280,806
|
|
|
35,130,211
|
|
Diluted
|
35,805,205
|
|
|
35,201,307
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|
Pangaea Logistics
Solutions Ltd.
|
Consolidated
Balance Sheets
|
|
|
March 31,
2017
|
|
December 31,
2016
|
|
(unaudited)
|
|
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
21,721,830
|
|
|
$
|
22,322,949
|
|
Restricted
cash
|
6,100,000
|
|
|
6,100,000
|
|
Accounts receivable
(net of allowance of $4,495,314 at
March 31, 2017 and $4,752,265 at December 31, 2016)
|
22,653,254
|
|
|
20,476,797
|
|
Bunker
inventory
|
15,369,734
|
|
|
13,202,937
|
|
Advance hire, prepaid
expenses and other current assets
|
8,202,317
|
|
|
6,441,583
|
|
Total current
assets
|
74,047,135
|
|
|
68,544,266
|
|
|
|
|
|
Fixed assets,
net
|
299,579,775
|
|
|
275,265,672
|
|
Investments in
newbuildings in-process
|
—
|
|
|
18,383,964
|
|
Vessel under capital
lease
|
23,788,463
|
|
|
—
|
|
Total
assets
|
$
|
397,415,373
|
|
|
$
|
362,193,902
|
|
|
|
|
|
Liabilities and
stockholders' equity
|
|
|
|
Current
liabilities
|
|
|
|
Accounts payable,
accrued expenses and other current liabilities
|
$
|
21,965,338
|
|
|
$
|
23,231,179
|
|
Related party
debt
|
6,771,327
|
|
|
15,972,147
|
|
Deferred
revenue
|
7,336,836
|
|
|
6,422,982
|
|
Current portion
long-term debt
|
24,659,322
|
|
|
19,627,846
|
|
Current portion of
capital lease obligation
|
1,248,211
|
|
|
—
|
|
Dividend
payable
|
12,624,825
|
|
|
12,624,825
|
|
Total current
liabilities
|
74,605,859
|
|
|
77,878,979
|
|
|
|
|
|
Secured long-term
debt, net
|
117,457,847
|
|
|
107,637,851
|
|
Obligations under
capital lease
|
19,751,789
|
|
|
—
|
|
|
|
|
|
Commitments and
contingencies (Note 7)
|
|
|
|
|
|
|
|
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;
37,261,739 shares issued and outstanding at March 31, 2017;
36,590,417 shares issued and outstanding at December 31,
2016
|
3,726
|
|
|
3,659
|
|
Additional paid-in
capital
|
140,354,611
|
|
|
133,677,321
|
|
Accumulated
deficit
|
(16,062,737)
|
|
|
(17,409,579)
|
|
Total Pangaea
Logistics Solutions Ltd. equity
|
124,295,600
|
|
|
116,271,401
|
|
Non-controlling
interests
|
61,304,278
|
|
|
60,405,671
|
|
Total stockholders'
equity
|
185,599,878
|
|
|
176,677,072
|
|
Total liabilities
and stockholders' equity
|
$
|
397,415,373
|
|
|
$
|
362,193,902
|
|
Pangaea Logistics
Solutions Ltd.
|
Consolidated
Statements of Cash Flows
|
|
|
Three Months Ended
March 31,
|
|
2017
|
|
2016
|
Operating
activities
|
|
|
|
Net (loss)
income
|
$
|
(3,683)
|
|
|
$
|
1,604,174
|
|
Adjustments to
reconcile net income to net cash provided by operations:
|
|
|
|
Depreciation and
amortization expense
|
3,941,795
|
|
|
3,515,456
|
|
Amortization of
deferred financing costs
|
174,342
|
|
|
182,810
|
|
Amortization of
prepaid rent
|
30,485
|
|
|
—
|
|
Unrealized (gain)
loss on derivative instruments
|
(1,966,387)
|
|
|
335,959
|
|
(Gain) loss from
equity method investee
|
(80,681)
|
|
|
30,380
|
|
Provision for
doubtful accounts
|
147,745
|
|
|
703,354
|
|
Loss on sale and
leaseback of vessel
|
4,289,998
|
|
|
—
|
|
Share-based
compensation
|
446,978
|
|
|
136,496
|
|
Change in operating
assets and liabilities:
|
|
|
|
Decrease in
restricted cash
|
—
|
|
|
500,000
|
|
Accounts
receivable
|
(2,324,202)
|
|
|
5,371,689
|
|
Bunker
inventory
|
(2,166,797)
|
|
|
(321,343)
|
|
Advance hire, prepaid
expenses and other current assets
|
(69,870)
|
|
|
(779,759)
|
|
Drydocking
costs
|
(63,808)
|
|
|
(42,478)
|
|
Accounts payable,
accrued expenses and other current liabilities
|
(838,732)
|
|
|
(6,342,724)
|
|
Deferred
revenue
|
913,854
|
|
|
(759,937)
|
|
Net cash provided by
operating activities
|
2,431,037
|
|
|
4,134,077
|
|
|
|
|
|
Investing
activities
|
|
|
|
Purchase of
vessels
|
(793,953)
|
|
|
(253,492)
|
|
Proceeds from sale
and leaseback of vessel
|
21,000,000
|
|
|
—
|
|
Deposits on
newbuildings in-process
|
(37,108,800)
|
|
|
—
|
|
Purchase of building
and equipment
|
(7,245)
|
|
|
—
|
|
Purchase of
non-controlling interest in consolidated subsidiary
|
(799,289)
|
|
|
—
|
|
Net cash used in
investing activities
|
(17,709,287)
|
|
|
(253,492)
|
|
|
|
|
|
Financing
activities
|
|
|
|
Payments of related
party debt
|
—
|
|
|
(2,473,921)
|
|
Proceeds from
long-term debt
|
19,500,000
|
|
|
—
|
|
Payments of financing
and issuance costs
|
(763,381)
|
|
|
(34,425)
|
|
Payments of long-term
debt
|
(4,059,488)
|
|
|
(6,126,454)
|
|
Accrued common stock
dividends paid
|
—
|
|
|
(100,000)
|
|
Net cash provided by
(used in) financing activities
|
14,677,131
|
|
|
(8,734,800)
|
|
|
|
|
|
Net decrease in cash
and cash equivalents
|
(601,119)
|
|
|
(4,854,215)
|
|
Cash and cash
equivalents at beginning of period
|
22,322,949
|
|
|
37,520,240
|
|
Cash and cash
equivalents at end of period
|
$
|
21,721,830
|
|
|
$
|
32,666,025
|
|
|
|
|
|
Supplemental cash
flow information
|
|
|
|
Cash paid for
interest
|
$
|
1,420,287
|
|
|
$
|
1,191,405
|
|
Extinguishment of
related party loan
|
$
|
9,278,800
|
|
|
$
|
—
|
|
Pangaea Logistics
Solutions Ltd.
|
Reconciliation of
Adjusted EBITDA and Adjusted Earnings Per Share
|
|
|
|
Three Months Ended
March 31,
|
|
|
2017
|
|
2016
|
Adjusted EBITDA
(in millions)
|
|
|
|
|
(Loss) income from
operations
|
|
$
|
(355,753)
|
|
|
$
|
3,492,554
|
|
Depreciation and
amortization
|
|
3,941,795
|
|
|
3,515,456
|
|
Loss on sale and
leaseback of vessel
|
|
4,289,998
|
|
|
—
|
|
Adjusted
EBITDA
|
|
$
|
7,876,040
|
|
|
$
|
7,008,010
|
|
|
|
|
|
|
Earnings Per
Common Share - basic
|
|
|
|
|
Net income
attributable to Pangaea Logistics Solutions Ltd.
|
|
$
|
1,346,842
|
|
|
$
|
1,197,104
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding - basic
|
|
35,280,806
|
|
|
35,130,211
|
|
Weighted average
number of common shares outstanding - diluted
|
|
35,805,205
|
|
|
35,201,307
|
|
|
|
|
|
|
Earnings per common
share - basic
|
|
$
|
0.04
|
|
|
$
|
0.03
|
|
Earnings per common
share - diluted
|
|
$
|
0.04
|
|
|
$
|
0.03
|
|
|
|
|
|
|
Adjusted
EPS
|
|
|
|
|
Net income
attributable to Pangaea Logistics Solutions Ltd.
|
|
$
|
1,346,842
|
|
|
$
|
1,197,104
|
|
Non-GAAP
Adjustments:
|
|
|
|
|
Add: loss on sale and
leaseback of vessel
|
|
4,289,998
|
|
|
—
|
|
Non-GAAP adjusted net
income attributable to Pangaea Logistics Solutions Ltd.
|
|
$
|
5,636,840
|
|
|
$
|
1,197,104
|
|
|
|
|
|
|
Weighted average
number of common shares - basic
|
|
35,280,806
|
|
|
35,130,211
|
|
Adjusted
EPS
|
|
$
|
0.16
|
|
|
$
|
0.03
|
|
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 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 charges that are not incurred in the normal course of
business. 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.
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 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 and leaseback of vessel, loss on impairment of vessel and
certain non-recurring charges, divided by the weighted average
number of shares of common stock.
There are limitations related to the use of adjusted EBITDA and
adjusted EPS versus loss or income from operations, and EPS
calculated in accordance with GAAP. In particular, Pangaea's
definition of adjusted EBITDA and adjusted EPS used here is not
comparable to EBITDA and EPS. Management provides specific
information in order to reconcile the GAAP or non-GAAP measure to
adjusted EBITDA and 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.
Media contact: Sean Silva, Prosek
Partners, ssilva@prosek.com, 212-279-3115
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SOURCE Pangaea Logistics Solutions Ltd.