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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________
 
FORM 8-K
CURRENT REPORT
 
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 
 
Date of Report (Date of earliest event reported): August 9, 2023  
 
PANGAEA LOGISTICS SOLUTIONS LTD.
(Exact Name of Registrant as Specified in Charter)
 
Bermuda001-3679898-1205464
(State or Other Jurisdiction(Commission(IRS Employer
of Incorporation)File Number)Identification No.)
 
c/o Phoenix Bulk Carriers (US) LLC
109 Long Wharf, Newport, Rhode Island 02840
(Address of Principal Executive Offices) (Zip Code)
 
(401) 846-7790
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
 ☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 ☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 ☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 ☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e 4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of exchange on which registered
Common StockPANLNASDAQ

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Item 2.02Results of Operations and Financial Condition.

On August 9, 2023, Registrant issued a press release announcing financial results for three months ended June 30, 2023. The press release is furnished as Exhibit 99.1, its Quarterly Investor Presentation is attached as Exhibit 99.2.
 
The information contained in, or incorporated into, this Current Report on Form 8-K is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities under that section, nor shall it be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in any such filing.

Item 9.01Financial Statements and Exhibits.
 
(d)Exhibits
ExhibitDescription
 


104    Cover Page Interactive Data File ( embedded within Inline XBRL document)




SIGNATURE
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Dated: August 9, 2023
 PANGAEA LOGISTICS SOLUTIONS LTD.
  
 By: /s/ Gianni Del Signore
  Name: Gianni Del Signore
Title: Chief Financial Officer
 
 



Pangaea Logistics Solutions Ltd. Reports Financial Results for the Quarter Ended June 30, 2023
NEWPORT, RI - August 9, 2023 - 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 June 30, 2023.
SECOND QUARTER 2023 RESULTS
(As compared to the second quarter 2022)

•Net income attributable to Pangaea of $2.8 million, or $0.06 per diluted share
•Adjusted net income attributable to Pangaea of $4.6 million, or $0.10 per diluted share
•Operating cash flow of $2.0 million, a decrease of 95% y/y
•Adjusted EBITDA of $15.9 million, a decrease of 64% y/y
•Time Charter Equivalent ("TCE") rates earned by Pangaea of $15,558 per day, a decline of 43% y/y
•Pangaea’s TCE rates exceeded the average Baltic Panamax and Supramax indices by approximately 49%
•Ratio of net debt to trailing twelve-month Adjusted EBITDA of 2.1x
•Completed the strategic acquisition of marine port terminal operations, expanding logistics service offerings
•Expanded owned vessel fleet to 25 through the acquisition of the 61,000 dwt Bulk Prudence

For the second quarter ended June 30, 2023, Pangaea reported non-GAAP adjusted net income of $4.6 million, or $0.10 per diluted share, on total revenue of $118.1 million. Second quarter TCE rates declined 43% on a year-over-year basis, while total shipping days, which include both voyage and time charter days, declined 14% to 4,056 days, when compared to the year-ago period.

The TCE earned was $15,558 per day for the three months ended June 30, 2023, compared to an average of $27,139 per day for the same period in 2022. During the second quarter 2023, the Company’s average TCE rate exceeded the benchmark average Baltic Panamax and Supramax indices by approximately 49%, supported by Pangaea’s long-term contracts of affreightment ("COAs"), specialized fleet, and cargo-focused strategy.

Total Adjusted EBITDA decreased 64% to $15.9 million in the second quarter, as demand weakness negatively impacted market rates. Adjusted EBITDA margin declined to 9.0% in the second quarter 2023, when compared to the year-ago period, driven by lower market rates.

As of June 30, 2023, the Company had $84.3 million in cash and equivalents. Total debt, including lease finance obligations was $283 million. At the end of the second quarter 2023, the Company's net debt to trailing twelve-month adjusted EBITDA was at 2.1x. During the three months ended June 30, 2023, the Company repaid $3.3 million of long-term debt, $4.1 million of finance leases, and paid $4.5 million of cash dividends.

As of August 8th the Company has booked approximately 3,500 total shipping days generating a TCE of $16,700 per day for the third quarter.

The Company's Board of Directors declared a quarterly cash dividend of $0.10 per common share, to be paid on September 15, 2023, to all shareholders of record as of September 1, 2023.

MANAGEMENT COMMENTARY

“During a period of softer dry bulk rates, our flexible chartered-in strategy has positioned Pangaea to consistently realize a premium TCE rate well above the benchmark indices,” stated Mark Filanowski, Chief Executive Officer of Pangaea Logistics Solutions. “While on a year-to-date basis, excess global dry bulk shipping capacity has resulted in lower overall market rates, our TCE rate exceeded the broader market by almost 50% in the second quarter, further highlighting the durability of our business model. In the third quarter, we anticipate a sequential improvement in our results as we enter peak demand season in the Arctic. At this time, all of our Ice Class 1A vessels are fully booked through October, positioning us to realize above-market rates as we enter the second half of the year."

“Pangaea continues to maintain a disciplined capital allocation strategy designed to drive long-term value creation for our shareholders,” continued Filanowski. “During the second quarter, we completed the acquisition of the 61,000 dwt Bulk Prudence, which we purchased with cash-on-hand. In addition, we closed on the previously announced acquisition of port terminal operations in Fort Lauderdale, Florida and Baltimore, Maryland, positioning us to further expand our on-shore capabilities as we develop an integrated transportation and logistics platform of scale. Finally, we continue to return capital to shareholders through a consistent quarterly cash dividend, with more than $9 million having been paid to shareholders on a year-to-date basis. Despite broader market softness, our premium rate model positions us to support a our return of capital strategy, in line with our holistic focus on total shareholder returns.”



“Looking ahead, we remain optimistic about the fundamentals in the dry bulk market with a historically low order book and a stable demand outlook.,” concluded Filanowski. “Entering the second half of the year, usually our strongest season, we are well positioned to drive improved utilization of our fleet and logistics operations. At the same time, we will continue to evaluate strategic investments in complementary assets that further enhance our unique value proposition, drive margin expansion, and support profitable growth for our shareholders.”


STRATEGIC UPDATE

Pangaea remains committed to developing a leading dry bulk logistics and transportation services company of scale, providing its customers with specialized shipping and supply chain and logistics offerings in commodity and niche markets, which drive premium returns measured in time charter equivalent per day.

Leverage integrated shipping and logistics model. In addition to operating the largest high ice class dry bulk fleet of Panamax and post-Panamax vessels globally, Pangaea also performs stevedoring services, together with port and terminal operations capabilities. In June 2023, Pangaea closed on the acquisition of marine port terminal operations in Port Everglades/Ft. Lauderdale, Port of Palm Beach, Florida, and Port of Baltimore, Maryland. With this acquisition, Pangaea strategically expands its North American terminal network to include the mid-Atlantic and southeastern United States. The acquisition provides Pangaea with additional dry bulk distribution capabilities within growing commerce centers, while augmenting its integrated ocean freight and shoreside solutions offering. The Company is actively leveraging its expanding footprint to grow its onshore relationships with new and existing customers.

Continue to drive strong fleet utilization. In the second quarter, Pangaea's 25 owned vessels were fully utilized and supplemented with an average of 20 chartered-in vessels to support cargo and COA commitments. Utilizing its nimble fleet approach, the Company reduced its exposure to the market by redelivering chartered-in vessels and reducing its average chartered-in fleet from 25 vessels on average during 2022 to 20 vessels in the second quarter 2023. In light of continued softness in the market, the Company was able to continue to meet customer demands by maintaining its chartered-in fleet at 20 vessels.

Continue to drive fleet upgrades and renewals. In June 2023, Pangaea completed the acquisition of the 61,000 dwt Bulk Prudence in the second-hand market for $26.6 million cash. Looking ahead, the Company intends to opportunistically manage its fleet with the purpose of maximizing TCE rates, while continuing to support client requirements on an on-demand basis.

SECOND QUARTER 2023 CONFERENCE CALL

The Company’s management team will host a conference call to discuss the Company’s financial results on Thursday, August 10, 2023 at 8:00 a.m., Eastern Time (ET). Accompanying presentation materials will be available in the Investor Relations section of the Company’s website at https://www.pangaeals.com/investors/. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download, and install any necessary audio software.

To participate in the live teleconference:

Domestic Live: 1-800-225-9448
International Live: 1-203-518-9708
Conference ID:     PANLQ223     

To listen to a replay of the teleconference, which will be available through August 17, 2023:

Domestic Replay: 1-800-934-5153
International Replay: 1-402-220-1182




Pangaea Logistics Solutions Ltd.
Consolidated Statements of Operations
(unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2023202220222022
Revenues:
Voyage revenue$110,465,557 $173,189,073 $218,415,680 $349,525,824 
Charter revenue7,090,440 22,354,883 12,839,392 37,780,535 
Terminal & Stevedore Revenue519,657 — 519,657 — 
Total revenue118,075,654 195,543,956 231,774,729 387,306,359 
Expenses:
Voyage expense54,459,633 67,907,824 111,274,264 133,158,291 
Charter hire expense29,125,662 65,713,016 51,716,502 143,424,623 
Vessel operating expense13,210,851 12,929,700 26,817,666 26,117,533 
   Terminal & Stevedore Expenses374,582 — 374,582 — 
General and administrative5,923,159 5,137,387 11,614,892 10,418,775 
Depreciation and amortization7,126,995 7,293,433 14,453,855 14,594,852 
Loss on impairment of vessel— — — 3,007,809 
Loss on sale of vessel— 318,032 1,172,196 318,032 
Total expenses110,220,882 159,299,392 217,423,957 331,039,915 
Income from operations7,854,772 36,244,564 14,350,772 56,266,444 
Other income (expense): 
Interest expense(4,125,720)(3,673,064)(8,376,234)(7,044,776)
Interest income1,042,564 38,332 2,092,410 38,871 
Income attributable to Non-controlling interest recorded as long-term liability interest expense
(905,337)(1,702,674)(760,600)(3,543,007)
Unrealized (loss) gain on derivative instruments, net(1,348,284)(3,501,649)(1,771,853)3,998,665 
Other income248,863 81,231 635,275 218,438 
Total other (expense) income, net(5,087,914)(8,757,824)(8,181,002)(6,331,809)
Net income2,766,858 27,486,740 6,169,770 49,934,635 
Loss (income) attributable to non-controlling interests77,682 (2,454,307)149,037 (4,734,237)
Net income attributable to Pangaea Logistics Solutions Ltd.$2,844,540 $25,032,433 $6,318,807 $45,200,398 
Earnings per common share:
Basic$0.06 $0.56 $0.14 $1.02 
Diluted$0.06 $0.56 $0.14 $1.00 
Weighted average shares used to compute earnings per common share:
Basic44,775,438 44,430,487 44,744,039 44,411,025 
Diluted45,127,972 45,070,533 45,122,019 45,129,077 



Pangaea Logistics Solutions Ltd.
Consolidated Balance Sheets
June 30, 2023December 31, 2022
(unaudited)(audited)
Assets
Current assets
Cash and cash equivalents$84,295,860 $128,384,606 
Accounts receivable (net of allowance of $5,497,118 and $4,367,848 at June 30, 2023 and December 31, 2022, respectively)42,822,372 36,755,149 
Bunker inventory27,452,209 29,104,436 
Advance hire, prepaid expenses and other current assets32,359,905 28,266,831 
Total current assets186,930,346 222,511,022 
Fixed assets, net486,380,572 476,524,752 
Finance lease right of use assets, net42,050,361 43,921,569 
Goodwill3,104,800 — 
Other non-current Assets6,106,786 5,284,127 
Total assets$724,572,865 $748,241,470 
Liabilities and stockholders' equity
Current liabilities
Accounts payable, accrued expenses and other current liabilities$46,705,982 $38,554,131 
Deferred revenue14,500,065 20,883,958 
Current portion of secured long-term debt32,259,599 15,782,530 
Current portion of finance lease liabilities16,423,228 16,365,075 
Dividend payable808,862 626,178 
Total current liabilities110,697,736 92,211,872 
Secured long-term debt, net73,441,002 98,819,739 
Finance lease liabilities, net160,627,406 168,513,939 
Long-term liabilities - other18,234,990 19,974,390 
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; 46,466,622 shares issued and outstanding at June 30, 2023; 45,898,395 shares issued and outstanding at December 31, 20224,648 4,590 
Additional paid-in capital163,890,246 162,894,080 
Retained earnings148,330,406 151,327,392 
Total Pangaea Logistics Solutions Ltd. equity312,225,300 314,226,062 
Non-controlling interests49,346,431 54,495,468 
Total stockholders' equity361,571,731 368,721,530 
Total liabilities and stockholders' equity$724,572,865 $748,241,470 

Pangaea Logistics Solutions, Ltd.
Consolidated Statements of Cash Flows

Six Months Ended June 30,
20232022
Operating activities(unaudited)(unaudited)
Net income$6,169,770 $49,934,635 
Adjustments to reconcile net income to net cash provided by operations: 
Depreciation and amortization expense14,453,855 14,594,852 
Amortization of deferred financing costs471,582 499,703 
Amortization of prepaid rent60,564 60,969 
Unrealized loss (gain) on derivative instruments1,771,853 (3,998,665)
Income from equity method investee(635,275)(218,438)
Earnings attributable to non-controlling interest recorded as other long term liability760,600 3,543,007 
Provision for doubtful accounts1,129,270 518,796 
Loss on impairment of vessel— 3,007,809 
Loss on sale of vessel1,172,196 318,032 
Drydocking costs(3,361,280)(4,858,510)
Share-based compensation1,123,507 1,138,785 
Change in operating assets and liabilities:
Accounts receivable(7,196,493)12,640,090 
Bunker inventory1,652,227 (25,675,924)
Advance hire, prepaid expenses and other current assets(3,503,097)12,286,477 
Accounts payable, accrued expenses and other current liabilities5,894,024 13,292,238 
Deferred revenue(6,383,893)(7,858,791)
Net cash provided by operating activities13,579,410 69,225,065 
Investing activities  
Purchase of vessels and vessel improvements(27,039,525)(18,501,875)
Purchase of fixed assets and equipment— (71,416)
Contributions to non-consolidated subsidiaries— (18,505)
Proceeds from sale of vessel8,933,700 8,400,000 
Acquisitions, net of cash acquired(7,200,000)— 
Dividends received from equity method investments1,627,500 — 
Net cash used in investing activities(23,678,325)(10,191,796)
Financing activities
Payments of financing fees and issuance costs— (331,317)
Payments of long-term debt(9,096,390)(9,010,117)
Proceeds from finance leases— 15,000,000 
Payments of finance lease obligations(8,133,049)(7,808,388)
Dividends paid to non-controlling interests(5,000,000)(5,000,000)
Accrued common stock dividends paid(9,133,109)(5,629,329)
Cash paid for incentive compensation shares relinquished(127,283)(287,630)
Payments to non-controlling interest recorded as long-term liability(2,500,000)— 
Net cash used in financing activities(33,989,831)(13,066,781)
Net (decrease) increase in cash and cash equivalents(44,088,746)45,966,488 
Cash and cash equivalents at beginning of period128,384,606 56,208,902 
Cash and cash equivalents at end of period$84,295,860 $102,175,390 

Pangaea Logistics Solutions Ltd.
Reconciliation of Non-GAAP Measures
(unaudited)

Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Net Transportation and Service Revenue
Gross Profit$13,805,410 $41,699,983 $27,192,817 $70,011,060 
Add:
Vessel Depreciation and Amortization7,099,516 7,293,433 14,398,898 14,594,852 
Net transportation and service revenue$20,904,926 $48,993,416 $41,591,715 $84,605,912 
Adjusted EBITDA
Net Income2,766,858 27,486,740 6,169,770 49,934,635 
Interest expense, net3,083,156 3,634,732 6,283,824 7,005,905 
Income attributable to Non-controlling interest recorded as long-term liability interest expense
905,337 1,702,674 760,600 3,543,007 
Depreciation and amortization7,126,995 7,293,433 14,453,855 14,594,852 
EBITDA13,882,346 40,117,579 27,668,049 75,078,399 
Non-GAAP Adjustments:
Loss on impairment of vessels— — — 3,007,809 
Loss on sale of vessels— 318,032 1,172,196 318,032 
Share-based compensation267,073 310,979 1,123,507 1,138,785 
Unrealized loss (gain) on derivative instruments, net1,348,284 3,501,649 1,771,853 (3,998,665)
Other non-recurring items425,702 — 425,702 — 
Adjusted EBITDA$15,923,405 $44,248,239 $32,161,307 $75,544,360 
Earnings Per Common Share
Net income attributable to Pangaea Logistics Solutions Ltd.$2,844,540 $25,032,433 $6,318,807 $45,200,398 
Weighted average number of common shares outstanding - basic44,775,438 44,430,487 44,744,039 44,411,025 
Weighted average number of common shares outstanding - diluted45,127,972 45,070,533 45,122,019 45,129,077 
Earnings per common share - basic$0.06 $0.56 $0.14 $1.02 
Earnings per common share - diluted$0.06 $0.56 $0.14 $1.00 
Adjusted EPS
Net Income attributable to Pangaea Logistics Solutions Ltd.$2,844,540 $25,032,433 $6,318,807 $45,200,398 
Non-GAAP
Add: loss on impairment of vessels— — — 3,007,809 
Loss on sale of vessels— 318,032 1,172,196 318,032 
Unrealized loss (gain) on derivative instruments1,348,284 3,501,649 1,771,853 (3,998,665)
Other non-recurring items425,702 $— 425,702 — 
Non-GAAP adjusted net income attributable to Pangaea Logistics Solutions Ltd.$4,618,526 $28,852,114 $9,688,558 $44,527,574 
Weighted average number of common shares - basic44,775,438 44,430,487 44,744,039 44,411,025 
Weighted average number of common shares - diluted45,127,972 45,070,533 45,122,019 45,129,077 
Adjusted EPS - basic$0.10 $0.65 $0.22 $1.00 
Adjusted EPS - diluted$0.10 $0.64 $0.21 $0.99 


Pangaea Logistics Solutions Ltd.
Reconciliation of Non-GAAP Measures
(unaudited)


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 and terminal & stevedore 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 net income (or loss), determined in accordance with U.S. GAAP, excluding interest expense, interest income, income taxes, depreciation and amortization, loss on impairment, loss on sale and leaseback of vessels, share-based compensation, other non-operating income and/or expense and other non-recurring items, if any. 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 SignoreStefan C. Neely
Chief Financial OfficerVallum Advisors
401-846-7790
Investors@pangaeals.comPANL@val-adv.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.

2Q23 Earnings Call Presentation

 
2 Safe Harbor 2Q23 Earnings Call Presentation This presentation may include certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding future financial performance, future growth and future acquisitions. These statements are based on Pangaea’s and managements’ current expectations or beliefs and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements herein due to changes in economic, business, competitive and/or regulatory factors, and other risks and uncertainties affecting the operation of Pangaea’s business. These risks, uncertainties and contingencies include: business conditions; weather and natural disasters; changing interpretations of GAAP; outcomes of government reviews; inquiries and investigations and related litigation; continued compliance with government regulations; legislation or regulatory environments; requirements or changes adversely affecting the business in which Pangaea is engaged; fluctuations in customer demand; management of rapid growth; intensity of competition from other providers of logistics and shipping services; general economic conditions; geopolitical events and regulatory changes; and other factors set forth in Pangaea’s filings with the Securities and Exchange Commission and the filings of its predecessors. The information set forth herein should be read in light of such risks. Further, investors should keep in mind that certain of Pangaea’s financial results are unaudited and do not conform to SEC Regulation S-X and as a result such information may fluctuate materially depending on many factors. Accordingly, Pangaea’s financial results in any particular period may not be indicative of future results. Pangaea is not under any obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise.

 
3 2Q23 Performance Summary Strong operating results highlight flexible, value-oriented business model Superior TCE rate driven by long-term COAs and cargo-focused strategy resulted in TCE rates exceeding the benchmark average Baltic Panamax and Supramax indices by 49%+ in 2Q23. Amid a 60% Y-o-Y decrease in market rates caused by normalizing supply conditions, delivered consistent operating cash flow generation of $2.0 million during 2Q23 and Adjusted EBITDA of $15.9 million compared to record quarterly profitability in 2Q22. Completed the purchase of the Bulk Prudence, a 61,00 dwt Ultramax vessel for $26.7 million of cash. The purchase takes the total number of owned vessels to 25. Completed the strategic acquisition of additional Port and Terminal operations in key U.S markets for $7.2 million. Continue to focus on opportunistic expansion of terminal and logistics business. Continue to execute on key capital allocation priorities, maintaining cash dividend of $0.10 per common share, paid on September 15th. Expect to continue to deliver premium market returns and consistent cash flow generation through the second half of the year, underpinned seasonal ice class demand in Q3. Through August 8, 2023, 3,500 days performed at an average of $16,700/day.

 
4 2Q23 Performance Summary Adjusted EBITDA $s in Millions Adjusted EPS $s per Share TCE Rate $s per Shipping Day Operating Cash Flow $s in Millions $16 $44 2Q23 2Q22 $0.10 $0.64 2Q23 2Q22 $15,558 $27,139 2Q23 2Q22 $2.0 $37.2 2Q23 2Q22

 
5 Outperforming Industry Benchmark Our TCE has exceeded the market by an average of 30% on a trailing 5-year basis Cargo Focused Business Model Consistently Delivers Above- Market Performance • Current 3Q23 projected TCE rate of $16,700, a 96% premium to the market average through the quarter*. • Our niche, higher- margin trades remain a key area of differentiation * Q3 23 estimated TCE performance based on shipping days performed through August 8, 2023 **Average of the published Panamax and Supramax indices, net of commission - 1,000 2,000 3,000 4,000 5,000 6,000 $- $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 D ay s TC E R at e ($ s p e r S h ip p in g D ay ) PANL Total Shipping Days PANL TCE Rate Market Average Rate**

 
6 Recent Vessel Acquisitions Disciplined acquiror of complementary assets MV Bulk Sachuest - Supramax MV Bulk Courageous - Ultramax MV Bulk Promise - Panamax MV Bulk Valor - Supramax MV Bulk Concord - Panamax MV Nordic Nuluujaak – Post Panamax(1) MV Nordic Qinnqua – Post Panamax(1) MV Nordic Sanngijug – Post Panamax(1) MV Nordic Siku – Post Panamax(1) (1) Vessels are owned through a Joint Venture, of which Pangaea owns 50%. 2021 Purchased 7 vessels for $205 million Purchased 3 vessels for $64 million 2022 & 2023 MV Bulk Prudence - Ultramax

 
7 Return of Capital Program Stable quarterly cash dividend supported by stable profitability Annual Dividend Payout Ratio % of Adjusted Net Income Total Annual Cash Dividend Paid $s per Share Annual Dividend Coverage Ratio Ratio of Operating Cash Flow to Dividends Issued $0.11 $0.02 $0.11 $0.30 2019 2020 2021 2022 24.4% 6.3% 7.4% 16.5% 2019 2020 2021 2022 Targeted dividend policy is aimed toward sustainability through the cycle Dividend payout has increased amid favorable market conditions and strategic execution Improved margins and cash conversion support dividend coverage despite volatile dry bulk market 9.9x 22.9x 11.2x 10.1x 2019 2020 2021 2022

 
8 Balance Sheet Update Ample liquidity to support ongoing growth of business Opportunistically invested in owned ship fleet during 2021 amid attractive market dynamics Repaid over $30 million in debt during 2022 through free cash flow and vessel sales Capital allocation priorities will be balanced between debt repayment, fleet investment, opportunistic M&A and shareholder returns $127.8 $116.4 $255.5 $175.6 $202.4 $53.1 $46.9 $56.2 $128.4 $84.3 2.4x 2.7x 2.4x 1.3x 2.1x 0.0x 0.5x 1.0x 1.5x 2.0x 2.5x 3.0x $- $50.0 $100.0 $150.0 $200.0 $250.0 $300.0 $350.0 2019 2020 2021 2022 2Q23 TT M N et D eb t/ A d j. E B IT D A $ s in M ill io n s Total Net Debt Total Cash Net Leverage

 
9 Macro Shipping Outlook Focused on providing comprehensive logistics solutions with targeted dry bulks Near Term Outlook (1H23) Medium Term Outlook (Full-Year 2023) Long-Term Outlook (2023-2025) • Recovery of China economy is expected to be a positive for demand • US Infrastructure spending is beginning to ramp up, creating favorable tailwinds for construction related raw materials • Normal seasonality is expected to be amplified by pre-recession demand slowdowns in Europe and North America • Significant decline in vessel manufacturing will constrain ship supply and tighten the overall dry bulk market • Trade disruptions resulting from geopolitical tensions are expected to increase ton mile demand • Current risk to medium-term rate improvement is a more pronounced global recession • Clarity in emissions free fuel alternatives creates opportunity for fleet renewal and niche offerings • Supply chain reorganizations provide the opportunity for the Company to grow its logistics offerings with new and existing customers • Emissions regulations will continue to put pressure on markets as fleets age amid limited new and compliant vessels are built

 
10 Value Creation Strategy Durable business model insulated from macro volatility – focused on deploying capital to drive above-sector growth Integrated shipping- logistics model • Provide solutions to customer supply chain issues • More efficient, lower total cost of delivery for customer • Adds volume and margins to PANL ocean freight offerings High fleet utilization • Utilize chartered in fleet to arbitrage vessel positions and provide more revenue days Organic investment • Expand capabilities to offer cargo movement beyond ocean transportation • Expand owned fleet for growth using our unique business plan • Apply consistent approach to expand and renew fleet Inorganic investment • Purchase vessels in support of existing long- term COAs, to maximize returns • Acquire logistics companies to grow in logistics sector Return of capital • Sustain consistent dividend approach, not a payout formula • Conserve capital for fleet renewal and opportunistic growth • Compensate for volatility of sector by maintaining reasonable liquidity Balance sheet optionality • Promote historical lending relationships, sustainable business plan, and consistent performance to help provide favorable lending terms • Maintain low net leverage and substantial free cash generation to provide flexibility in financing growth projects • Consider joint ventures to help mitigate risks and create synergies

 
11 Investment Conclusion Small-cap growth play with stable return of capital program Integrated shipping-logistics model delivering consistent, above-market returns Focused on consistently high fleet utilization to drive operating leverage Positioned to benefit from tightening global supply of dry- bulk vessels amid continued demand growth On-shore logistics offering provides significant, incremental revenue opportunities Leading position within Ice-Class trades supports superior earned TCE rates Disciplined capital allocation strategy Long-term cargo-based contracts provide multi-year demand visibility Significant balance sheet optionality to pursue growth, low net leverage

 
Confidential: Pangaea Logistics Solutions Appendix

 
13 Selected Balance Sheet Data (in thousands) June 30, 2023 December 31, 2022 (unaudited) Current Assets Cash and cash equivalents 84,296$ 128,385$ Accounts receivable, net 42,822 36,755 Other current assets 59,812 57,371 Total current assets 186,930 222,511 Fixed assets, including finance lease right of use assets, net 528,431 520,446 Goodwill 3,105 - Other Non-current Assets 6,107 5,284 Total assets 724,573$ 748,241$ Current liabilities Accounts payable, accrued expenses and other current liabilities 46,706$ 38,554$ Current portion long-term debt and finance lease liabilities 48,683 32,148 Other current liabilities 15,309 21,510 Total current liabilties 110,698 92,212 Secured long-term debt and finance lease liabilities, net 234,068 267,334 Other long-term liabilities 18,235 19,974 Total Pangaea Logistics Solutions Ltd. equity 312,225 314,226 Non-controlling interests 49,346 54,495 Total stockholders' equity 361,572 368,722 Total liabilities and stockholders' equity 724,573$ 748,241$

 
14 Selected Income Statement Data Adjusted EBITDA represents net income (or loss), determined in accordance with U.S. GAAP, excluding interest expense, interest income, income taxes, depreciation and amortization, loss on impairment, loss on sale and leaseback of vessels, share-based compensation, other non-operating income and/or expense, and other non-recurring items, if any. (in thousands,may not foot due to rounding) 2023 2022 2023 2022 (unaudited) (unaudited) (unaudited) (unaudited) Revenues: Voyage revenue 110,466$ 173,189$ 218,416$ 349,526$ Charter revenue 7,090 22,355 12,839 37,781 Terminal & stevedore revenue 520 - 520 - Total revenue 118,076 195,544 231,775 387,306 Expenses: Voyage expense 54,460 67,908 111,274 133,158 Charter hire expense 29,126 65,713 51,717 143,425 Vessel operating expenses 13,211 12,930 26,818 26,118 Terminal Expenses 375 - 375 - General and administrative 5,923 5,137 11,615 10,419 Depreciation and amortization 7,127 7,293 14,454 14,595 Loss on impairment of vessel - - - 3,008 Loss on sale of vessel - 318 1,172 318 Total expenses 110,221 159,299 217,424 331,040 Income from operations 7,855 36,245 14,351 56,266 Total other (expense) income, net (5,088) (8,758) (8,181) (6,332) Net income 2,767 27,487 6,170 49,935 Loss (income) attributable to noncontrolling interests 78 (2,454) 149 (4,734) Net income attributable to Pangaea Logistics Solutions Ltd. 2,845$ 25,032$ 6,319$ 45,200$ Adjusted EBITDA (1) 15,923$ 44,248$ 32,161$ 75,544$ Six months ended June 30,Three months ended June 30,

 
15 Reconciliation of Non-GAAP Measures 6/30/2023 6/30/2022 6/30/2023 6/30/2022 (unaudited) (unaudited) (unaudited) (unaudited) Net Transportation and Service Revenue Gross Profit 13,805,410$ 41,699,983$ 27,192,817$ 70,011,060$ Add: Vessel Depreciation and amortization 7,099,516 7,293,433 14,398,898 14,594,852 Net transportation and service revenue 20,904,926$ 48,993,416$ 41,591,715$ 84,605,912$ Adjusted EBITDA Net Income 2,766,858$ 27,486,740$ 6,169,770$ 49,934,635$ Interest expense 4,125,720 3,673,064 8,376,234 7,044,776 Interest income (1,042,564) (38,332) (2,092,410) (38,871) Income attributable to Non-controlling interest recorded as long-term liability interest expense 905,337 1,702,674 760,600 3,543,007 Depreciation and amortization 7,126,995 7,293,433 14,453,855 14,594,852 EBITDA 13,882,346 40,117,579 27,668,049 75,078,399 Non-GAAP Adjustments: Loss on impairment of vessels - - - 3,007,809 Loss on sale of vessels - 318,032 1,172,196 318,032 Share-based compensation 267,073 310,979 1,123,507 1,138,785 Unrealized loss (gain) on derivative instruments, net 1,348,284 3,501,649 1,771,853 (3,998,665) Other non-recurring items 425,702 - 425,702 - Adjusted EBITDA 15,923,405$ 44,248,239$ 32,161,307$ 75,544,360$ For the three months ended For the six months ended

 
16 Reconciliation of Non-GAAP Measures Earnings Per Common Share Net income attributable to Pangaea Logistics Solutions Ltd. 2,844,540$ 25,032,433$ 6,318,807$ 45,200,398$ Weighted average number of common shares - basic 44,744,039 44,430,487 44,744,039 44,411,025 Weighted average number of common shares - diluted 45,122,019 45,070,533 45,122,019 45,129,077 Earnings per common share - basic 0.06$ 0.56$ 0.14$ 1.02$ Earnings per common share - diluted 0.06$ 0.56$ 0.14$ 1.00$ Adjusted EPS Net income attributable to Pangaea Logistics Solutions Ltd. 2,844,540$ 25,032,433$ 6,318,807$ 45,200,398$ Non-GAAP Add: Loss on impairment of vessels - - - 3,007,809 Loss on sale of vessels - 318,032 1,172,196 318,032 Unrealized loss (gain) on derivative instruments, net 1,348,284 3,501,649 1,771,853 (3,998,665) Other non-recurring items 425,702 - 425,702 - Non-GAAP adjusted net income attributable to Pangaea Logistics Solutions Ltd. 4,618,526 28,852,114 9,688,558 44,527,574 Weighted average number of common shares - basic 44,775,438 44,430,487 44,744,039 44,411,025 Weighted average number of common shares - diluted 45,127,972 45,070,533 45,122,019 45,129,077 Adjusted EPS - basic 0.10$ 0.65$ 0.22$ 1.00$ Adjusted EPS - diluted 0.10$ 0.64$ 0.21$ 0.99$

 
v3.23.2
Cover
Aug. 09, 2023
Cover [Abstract]  
Document Type 8-K
Document Period End Date Aug. 09, 2023
Entity Registrant Name PANGAEA LOGISTICS SOLUTIONS LTD.
Entity Central Index Key 0001606909
Entity Tax Identification Number 98-1205464
Amendment Flag false
Entity Incorporation, State or Country Code D0
Entity File Number 001-36798
Entity Address, Address Line One 109 Long Wharf
Entity Address, City or Town Newport
Entity Address, State or Province RI
Entity Address, Postal Zip Code 02840
City Area Code 401
Local Phone Number 846-7790
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock
Trading Symbol PANL
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
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