NEWPORT, R.I., Aug. 14,
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 June 30, 2017.
2nd Quarter 2017
Highlights
- Increase in revenue from $57.0
million to $91.4 million (61%)
from Q2 2016 to Q2 2017.
- Adjusted EBITDA1 of $7.4
million, excluding a $4.9
million loss on sale and leaseback of the m/v Bulk
Beothuk2, as compared to $4.3
million for the same period of last year.
- Pangaea's TCE rates increased 30% and total shipping days
increased 35% due to continued growth in the drybulk market and to
an increase in drybulk market rates. The BDI, a measure of drybulk
performance, increased to an average of 1,096 for the second
quarter of 2017 versus 563 for the same period of 2016.
- At the end of the quarter, Pangaea had $29.4 million in unrestricted cash and cash
equivalents after acquiring the m/v Bulk Freedom on June 14, 2017. Cash includes $8.3 million net proceeds from the issuance of
common stock in a private placement transaction completed on
June 26, 2017.
Results for the three months ended June 30, 2017
For the second quarter of 2017, the Company reported a net loss
of $4.7 million, compared to net
income of $0.1 million in the second
quarter of 2016. The 2017 net loss includes a $4.9 million loss on the sale and leaseback of
the vessel m/v Bulk Beothuk. There was no such loss in the
comparable period of 2016. Drybulk market demand and market rates
improved considerably in the second quarter as compared to the same
period of 2016, which is evidenced by the increase in total revenue
to $91.4 million for the three months
ended June 30, 2017, compared to $57.0
million for the three months ended June 30, 2016. These
improvements also helped push total shipping days up 35% to 4,661
in the three months ended June 30, 2017, compared to 3,457 for
the same period in 2016. Adjusted EBITDA1 was
$7.4 million, compared with
$4.3 million for the second 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 may use freight forward agreements to limit exposure to
intervening shifts in rates and to secure margins. Use of these
FFAs and bunker fuel swaps, which were not designated for hedge
accounting, resulted in a net unrealized loss on derivative
instruments of $1.5 million in the
three months ended June 30, 2017 as compared to a net
unrealized gain of $1.4 million in
the same period of 2016.
During the quarter, the Company refinanced the m/v Bulk Beothuk
through a sale and leaseback transaction. This resulted in a net
increase in cash from the sale and repayment of the loan, and also
from the release of restricted cash. The Company also issued
3,935,665 shares of common stock in a private placement transaction
for aggregate net proceeds of $8.3
million, which together with the sale and leaseback, enabled
the Company to acquire the m/v Bulk Freedom.
"Under the backdrop of a stabilizing dry bulk industry, we
reported strong second quarter results highlighted by significant
increases in revenue, TCE rates, shipping days and Adjusted EBITDA.
This is particularly encouraging for this period, which tends to be
softer following our ice season. Furthermore, the equity raise in
the quarter positions us to advance several strategic initiatives,
including acquisition of dry bulk vessels and expansion of our
logistics services, among others.
To that end, the sale and bareboat charterback of m/v Bulk
Beothuk freed up enough cash for the Company to acquire the m/v
Bulk Freedom in a second hand market that is still depressed.
Timing our acquisitions to take advantage of the lag between market
recovery and valuation recovery is an essential part of our
strategy to increase tonnage while limiting leverage and ultimately
unlock shareholder value."
Cash Flows
Cash and cash equivalents were $29.4
million as of June 30, 2017, compared with $22.3 million on December
31, 2016.
For the six months ended June 30,
2017, the Company's net cash provided by operating
activities was $8.4 million, compared
to $10.0 million for the six months
ended June 30, 2016.
For the six months ended June 30,
2017 and 2016, net cash used in investing activities was
$47.7 million and $0.4 million, respectively. Net cash
provided by financing activities was $46.5
million for the six months ended June
30, 2017 and net cash used for financing activities was
$14.6 million for the six months
ended June 30, 2016. These
changes reflect the Company's investment in and purchase of
vessels, including the m/v Bulk Destiny and m/v Bulk
Beothuk, which were financed under sale and leaseback
arrangements; and the m/v Bulk Endurance and the m/v Bulk Freedom,
which were financed under commercial loan facilities.
The Company also noted that the private placement of common
stock to inside investors, as previously announced in a Current
Report on Form 8-K, was completed on August 9, 2017. The
Company issued 2,597,778 shares for cash proceeds of $1.5 million and a $4.4
million reduction in dividends payable.
Conference Call Details
The Company's management team will host a conference call to
discuss the Company's financial results on August 15, 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#
68208235.
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# 68208235.
1 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 (Loss) Income from
Operations to Adjusted EBITDA.
2 Accounted for as a capital lease under US Generally
Accepted Accounting Principles.
Pangaea Logistics
Solutions Ltd.
Consolidated
Statements of Operations
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
Voyage
revenue
|
$
|
80,231,015
|
|
|
$
|
53,548,976
|
|
|
$
|
157,919,464
|
|
|
$
|
95,523,295
|
|
Charter
revenue
|
11,192,763
|
|
|
3,412,729
|
|
|
17,959,435
|
|
|
5,375,929
|
|
|
91,423,778
|
|
|
56,961,705
|
|
|
175,878,899
|
|
|
100,899,224
|
|
Expenses:
|
|
|
|
|
|
|
|
Voyage
expense
|
38,597,148
|
|
|
26,766,724
|
|
|
79,869,067
|
|
|
45,267,606
|
|
Charter hire
expense
|
33,174,063
|
|
|
15,041,229
|
|
|
56,375,218
|
|
|
23,544,403
|
|
Vessel operating
expense
|
9,074,357
|
|
|
7,904,828
|
|
|
17,665,599
|
|
|
14,793,910
|
|
General and
administrative
|
3,141,276
|
|
|
2,935,950
|
|
|
6,656,040
|
|
|
5,972,321
|
|
Depreciation and
amortization
|
3,711,712
|
|
|
3,528,596
|
|
|
7,653,507
|
|
|
7,044,052
|
|
Loss on sale and
leaseback of vessels
|
4,915,044
|
|
|
—
|
|
|
9,205,042
|
|
|
—
|
|
Total
expenses
|
92,613,600
|
|
|
56,177,327
|
|
|
177,424,473
|
|
|
96,622,292
|
|
|
|
|
|
|
|
|
|
(Loss) income from
operations
|
(1,189,822)
|
|
|
784,378
|
|
|
(1,545,574)
|
|
|
4,276,932
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
Interest expense,
net
|
(2,244,110)
|
|
|
(1,530,425)
|
|
|
(3,875,098)
|
|
|
(2,900,038)
|
|
Interest expense on
related party debt
|
(78,846)
|
|
|
(75,010)
|
|
|
(156,825)
|
|
|
(155,500)
|
|
Unrealized (loss)
gain on derivative instruments, net
|
(1,476,380)
|
|
|
1,387,391
|
|
|
490,007
|
|
|
1,051,432
|
|
Other income
(expense)
|
813,356
|
|
|
67,661
|
|
|
908,006
|
|
|
(34,657)
|
|
Total other expense,
net
|
(2,985,980)
|
|
|
(150,383)
|
|
|
(2,633,910)
|
|
|
(2,038,763)
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
(4,175,802)
|
|
|
633,995
|
|
|
(4,179,484)
|
|
|
2,238,169
|
|
(Income) loss
attributable to non-controlling interests
|
(561,379)
|
|
|
(504,361)
|
|
|
789,146
|
|
|
(911,431)
|
|
Net (loss) income
attributable to Pangaea Logistics
Solutions Ltd.
|
$
|
(4,737,181)
|
|
|
$
|
129,634
|
|
|
$
|
(3,390,338)
|
|
|
$
|
1,326,738
|
|
|
|
|
|
|
|
|
|
(Loss) earnings per
common share:
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.13)
|
|
|
$
|
—
|
|
|
$
|
(0.10)
|
|
|
$
|
0.04
|
|
Diluted
|
$
|
(0.13)
|
|
|
$
|
—
|
|
|
$
|
(0.10)
|
|
|
$
|
0.04
|
|
|
|
|
|
|
|
|
|
Weighted average
shares used to compute (loss) earnings
|
|
|
|
|
|
|
|
per common
share
|
|
|
|
|
|
|
|
Basic
|
35,539,186
|
|
|
35,150,453
|
|
|
35,411,060
|
|
|
35,140,332
|
|
Diluted
|
35,539,186
|
|
|
35,337,290
|
|
|
35,411,060
|
|
|
35,269,824
|
|
Pangaea Logistics
Solutions Ltd.
Consolidated
Balance Sheets
|
|
|
|
June 30,
2017
|
|
December 31,
2016
|
|
(unaudited)
|
|
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
29,436,482
|
|
|
$
|
22,322,949
|
|
Restricted
cash
|
4,000,000
|
|
|
6,100,000
|
|
Accounts receivable
(net of allowance of $4,283,826 at
June 30, 2017 and $4,752,265 at December 31, 2016)
|
26,653,536
|
|
|
20,476,797
|
|
Bunker
inventory
|
14,944,785
|
|
|
13,202,937
|
|
Advance hire, prepaid
expenses and other current assets
|
9,931,653
|
|
|
6,441,583
|
|
Total current
assets
|
84,966,456
|
|
|
68,544,266
|
|
|
|
|
|
Fixed assets,
net
|
293,793,460
|
|
|
275,265,672
|
|
Investments in
newbuildings in-process
|
—
|
|
|
18,383,964
|
|
Vessels under capital
lease
|
30,576,925
|
|
|
—
|
|
Total
assets
|
$
|
409,336,841
|
|
|
$
|
362,193,902
|
|
|
|
|
|
Liabilities and
stockholders' equity
|
|
|
|
Current
liabilities
|
|
|
|
Accounts payable,
accrued expenses and other current liabilities
|
$
|
29,342,760
|
|
|
$
|
23,231,179
|
|
Related party
debt
|
6,850,173
|
|
|
15,972,147
|
|
Deferred
revenue
|
6,905,467
|
|
|
6,422,982
|
|
Current portion of
secured long-term debt
|
18,343,971
|
|
|
19,627,846
|
|
Current portion of
capital lease obligations
|
1,733,509
|
|
|
—
|
|
Dividend
payable
|
12,624,825
|
|
|
12,624,825
|
|
Total current
liabilities
|
75,800,705
|
|
|
77,878,979
|
|
|
|
|
|
Secured long-term
debt, net
|
117,689,641
|
|
|
107,637,851
|
|
Obligations under
capital lease
|
25,921,758
|
|
|
—
|
|
|
|
|
|
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;
41,197,404 shares issued and outstanding at June 30, 2017;
36,590,417
shares issued and outstanding at December 31, 2016
|
4,120
|
|
|
3,659
|
|
Additional paid-in
capital
|
148,888,160
|
|
|
133,677,321
|
|
Accumulated
deficit
|
(20,799,954)
|
|
|
(17,409,579)
|
|
Total Pangaea
Logistics Solutions Ltd. equity
|
128,092,326
|
|
|
116,271,401
|
|
Non-controlling
interests
|
61,832,411
|
|
|
60,405,671
|
|
Total stockholders'
equity
|
189,924,737
|
|
|
176,677,072
|
|
Total liabilities
and stockholders' equity
|
$
|
409,336,841
|
|
|
$
|
362,193,902
|
|
Pangaea Logistics
Solutions Ltd.
Consolidated
Statements of Cash Flows
|
|
|
|
Six Months Ended
June 30,
|
|
2017
|
|
2016
|
Operating
activities
|
|
|
|
Net (loss)
income
|
$
|
(4,179,484)
|
|
|
$
|
2,238,169
|
|
Adjustments to
reconcile net (loss) income to net cash provided by
operations:
|
|
|
|
Depreciation and
amortization expense
|
7,653,507
|
|
|
7,044,052
|
|
Amortization of
deferred financing costs
|
368,387
|
|
|
354,431
|
|
Amortization of
prepaid rent
|
60,969
|
|
|
—
|
|
Unrealized loss
(gain) on derivative instruments
|
(490,007)
|
|
|
(1,051,432)
|
|
(Gain) loss from
equity method investee
|
(194,612)
|
|
|
30,380
|
|
(Recovery of)
provision for doubtful accounts
|
(10,356)
|
|
|
931,962
|
|
Loss on sale and
leaseback of vessel
|
9,134,908
|
|
|
—
|
|
Share-based
compensation
|
677,936
|
|
|
176,068
|
|
Change in operating
assets and liabilities:
|
|
|
|
Decrease in
restricted cash
|
—
|
|
|
500,000
|
|
Accounts
receivable
|
(6,166,383)
|
|
|
4,205,465
|
|
Bunker
inventory
|
(1,741,848)
|
|
|
(900,310)
|
|
Advance hire, prepaid
expenses and other current assets
|
(3,343,536)
|
|
|
(1,082,336)
|
|
Drydocking
costs
|
(754,120)
|
|
|
(42,478)
|
|
Accounts payable,
accrued expenses and other current liabilities
|
6,853,566
|
|
|
(2,319,659)
|
|
Deferred
revenue
|
482,485
|
|
|
(99,238)
|
|
Net cash provided by
operating activities
|
8,351,412
|
|
|
9,985,074
|
|
|
|
|
|
Investing
activities
|
|
|
|
Purchase of
vessels
|
(46,846,313)
|
|
|
(402,432)
|
|
Purchase of building
and equipment
|
(16,775)
|
|
|
(30,000)
|
|
Purchase of
non-controlling interest in consolidated subsidiary
|
(832,572)
|
|
|
—
|
|
Net cash used in
investing activities
|
(47,695,660)
|
|
|
(432,432)
|
|
|
|
|
|
Financing
activities
|
|
|
|
Payments of related
party debt
|
—
|
|
|
(2,500,946)
|
|
Proceeds from
long-term debt
|
25,000,000
|
|
|
1,096,000
|
|
Payments of financing
and issuance costs
|
(876,542)
|
|
|
(34,425)
|
|
Payments of long-term
debt
|
(15,723,929)
|
|
|
(13,110,553)
|
|
Proceeds from sale
and leaseback of vessel
|
28,000,000
|
|
|
—
|
|
Payments of capital
lease obligations
|
(344,733)
|
|
|
—
|
|
Decrease in
restricted cash
|
2,100,000
|
|
|
—
|
|
Proceeds from private
placement of common stock, net of issuance costs
|
8,302,985
|
|
|
—
|
|
Accrued common stock
dividends paid
|
—
|
|
|
(100,000)
|
|
Net cash provided by
(used in) financing activities
|
46,457,781
|
|
|
(14,649,924)
|
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents
|
7,113,533
|
|
|
(5,097,282)
|
|
Cash and cash
equivalents at beginning of period
|
22,322,949
|
|
|
37,520,240
|
|
Cash and cash
equivalents at end of period
|
$
|
29,436,482
|
|
|
$
|
32,422,958
|
|
|
|
|
|
Supplemental cash
flow information
|
|
|
|
Cash paid for
interest
|
$
|
3,022,756
|
|
|
$
|
2,381,513
|
|
Extinguishment of
related party loan
|
$
|
9,278,800
|
|
|
$
|
—
|
|
Pangaea Logistics
Solutions Ltd.
Reconciliation of
(Loss) Income from Operations to Adjusted EBITDA and Earnings per
Share to Adjusted Earnings per Share
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
2017
|
|
2016
|
Adjusted EBITDA
(in millions)
|
|
|
|
|
(Loss) income from
operations
|
|
(1,189,822)
|
|
|
784,378
|
|
Depreciation and
amortization
|
|
3,711,712
|
|
|
3,528,596
|
|
Loss on sale and
leaseback of vessel
|
|
4,915,044
|
|
|
—
|
|
Adjusted
EBITDA
|
|
$
|
7,436,934
|
|
|
$
|
4,312,974
|
|
|
|
|
|
|
Adjusted
EPS
|
|
|
|
|
Earnings per share -
basic
|
|
$
|
(0.13)
|
|
|
$
|
—
|
|
Non-GAAP
Adjustments:
|
|
|
|
|
Add: loss on sale and
leaseback of vessel, per share
|
|
0.14
|
|
|
—
|
|
Adjusted
EPS
|
|
$
|
0.01
|
|
|
$
|
—
|
|
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
Adjusted EBITDA and Adjusted 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
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. Adjusted EPS represents earnings per share before loss on
sale and leaseback of vessel and loss on impairment of vessels,
when applicable.
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 are not
comparable to EBITDA and 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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