Adjusted EBITDA increases nearly six-fold
backed by strong margins and cash flow
Pangaea Logistics Solutions Ltd. (“Pangaea” or the “Company”)
(NASDAQ:PANL), a global provider of comprehensive maritime
logistics solutions, announced today its results for the quarter
ended September 30, 2015.
Third Quarter Highlights
- Net income attributable to Pangaea
Logistics Solutions Ltd. was $3.0 million in the third quarter of
2015, compared to a net loss of $2.9 million in the third quarter
of 2014
- Pro forma adjusted earnings per common
share1 of $0.08 in the third quarter of 2015, compared to a pro
forma adjusted loss per common share of $0.08 in the third quarter
of 2014
- Adjusted EBITDA2 increased to $8.1
million in the third quarter of 2015, compared with $1.2 million in
the third quarter of 2014
- Cash flow from operations was $18.0
million for the nine months ended September 30, 2015, compared with
$12.5 million for the same period in 2014
- At the end of the quarter, Pangaea had
$34.2 million in cash and cash equivalents
- Acquired the remaining non-controlling
interest in Nordic Bulk Carriers AS (“NBC”), making NBC a
wholly-owned subsidiary of Pangaea
Edward Coll, Chairman and Chief Executive Officer of Pangaea
Logistics Solutions, said, “This quarter’s performance exemplifies
our ability to continue to deliver profitable results in a
challenging dry bulk sector. Our focus on efficiency and our
disciplined approach to generating revenues coupled with a
commitment to delivering unmatched service to our global clients,
who rely on us to solve their most difficult logistical challenges,
remain the foundation of our Company. We are confident that our
unique business model and best-in-class execution will continue to
serve us well.”
1 Earnings per share represents total earnings allocated to
common stock divided by the weighted average number of common
shares outstanding. Pro Forma adjusted earnings per share
represents adjusted total earnings allocated to common stock
divided by the weighted average number of shares giving effect to
the mergers as if they had been consummated as of January 1, 2014.
See Reconciliation of Adjusted EBITDA and Pro Forma Adjusted
Earnings Per Share. 2 Adjusted EBITDA is a non-GAAP measure and
represents operating earnings before interest expense, income
taxes, depreciation and amortization, and other non-operating
income and/or expense, if any. See Reconciliation of Adjusted
EBITDA and Pro Forma Adjusted Earnings Per Share.
Results for the Quarter Ended September 30, 2015
The Company reported net income of $3.0 million, or $0.08 per
common share, for the third quarter of 2015, compared to a net loss
of $2.9 million, or $0.08 per common share on a pro forma basis, in
the third quarter of 2014. Adjusted EBITDA rose 575% to $8.1
million from $1.2 million. This improvement was primarily
attributable to Pangaea’s improved operating margin, which rose to
6.8% from negative 2.1% as the Company continued to focus on
profitable voyage revenue from contracts of affreightment and
benefited from declining bunker and charter-in costs during the
period.
Total revenue of $71.2 million for the quarter ended September
30, 2015 decreased 22% from the $91.2 million generated in the same
quarter in 2014 and comprised $64.6 million in voyage revenue and
$6.6 million in charter revenue, year-over-year decreases of 20%
and 38%, respectively.
Specifically, the decline in total revenue was primarily
attributable to a 16% decrease in the Company’s total shipping days
from 4,099 days in the third quarter of 2014 to 3,443 days in the
third quarter of 2015. Total shipping days are the sum of voyage
days, which are tied to COAs and decreased 11% year-over-year, and
charter days, which are subject to market rates and decreased 34%
year-over-year. The Company strategically limited its exposure to
declining rates by chartering in vessels only to meet the demands
of specific voyage contracts in order to maximize profitability and
reduce risk. Voyage and charter expenses declined more than
revenue, with year-over-year decreases of 35% and 40% respectively,
leading to the aforementioned improvement in operating margin.
Coll noted, “During the third quarter we continued to execute on
the strategy that has enabled us to deliver profits for
shareholders during a challenging 2015: focusing on profitable
trades tied to COAs, leveraging our expertise in backhaul and
vessel positioning to minimize idle time, limiting our exposure to
uncovered long vessel positions, controlling costs, improving
efficiencies, and working to selectively add attractive pieces of
business from new and existing clients.”
Markets
Mr. Coll commented about the dry bulk shipping market in
general, “The limited growth in commodities shipping activity and
the ongoing delivery of newbuildings to the global dry bulk fleet
leads us to believe that the rate environment will continue to be
challenged for some time. We believe Pangaea, with its
‘cargo-first’ emphasis and flexible ‘asset-right’ strategy, is
better positioned to weather the storm of too many ships chasing
too few cargoes than many of our competitors whose strategies are
asset heavy and burdened with large fixed costs. Our nimbleness
allows us to optimize our activities to meet changing conditions
and positions us to continue to outperform the industry in a
variety of rate environments, including the currently muted
one.”
Business Updates
In October, 2015, Pangaea acquired the remaining non-controlling
interest in Nordic Bulk Carriers AS (“NBC”), making NBC a
wholly-owned subsidiary of Pangaea.
Cash Flows
Cash and cash equivalents were $34.2 million as of September 30,
2015, compared with $29.8 million on December 31, 2014.
For the nine months ended September 30, 2015, the Company’s net
cash provided by operating activities was $18.0 million, compared
to $12.5 million for the year to date ended September 30, 2014.
For the nine months ended September 30, 2015 and 2014, net cash
used in investing activities was $40.9 million and $26.2 million,
respectively. Net cash provided by financing activities was $27.3
million and $14.9 million for the nine months ended September 30,
2015 and 2014, respectively. These increases reflect the Company’s
purchase of new ice-class ships, including the m/v Nordic Olympic
and m/v Nordic Odin, partially offset by the sale of the m/v Bulk
Cajun and the m/v Bulk Discovery. The Company also used cash
available from operating earnings to pay off its corporate credit
line of $3 million.
Conference Call Details
The Company’s management team will host a conference call to
discuss the Company’s financial results tomorrow, November, 13,
2015 at 8:00 a.m., Eastern Time (ET). Following a recorded
discussion of the quarterly results, Edward Coll, Chairman and
Chief Executive Officer, and Anthony Laura, Chief Financial
Officer, will be available to answer questions from attending
participants. 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#
75101707.
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 one week and
can be accessed by calling (800) 585-8367 (domestic) or (404)
537-3406 (international) and referencing ID# 97471493.
Pangaea Logistics Solutions Ltd.
Consolidated Statements of Income (unaudited)
Three months ended September 30, 2015
2014 Revenues: Voyage revenue
$
64,599,552 $ 80,604,263 Charter revenue
6,588,613 10,600,956
71,188,165 91,205,219 Expenses: Voyage expense
30,392,418 46,598,184 Charter hire expense
20,601,908
34,315,719 Vessel operating expenses
8,462,370 7,935,565
General and administrative
3,595,398 2,790,350 Depreciation
and amortization
3,195,437 3,118,973 (Gain) / Loss on sale
of vessels
71,882
(1,661,368 ) Total expenses
66,319,413 93,097,423
Income from operations
4,868,752 (1,892,204 ) Other
income (expense): Interest expense, net
(1,493,536 )
(1,348,252 ) Interest expense related party debt
(110,764
) (108,422 ) Imputed interest on related party long-term
debt
- - Unrealized gain (loss) gain on derivative
instruments
(513,678 ) (551,354 ) Other income
(expense)
30,000 83,803
Total other expense, net
(2,087,978 )
(1,924,225 ) Net income
2,780,774 (3,816,429 ) (Loss)
Income attributable to noncontrolling interests
221,895 906,822 Net
income attributable to Pangaea Logistics Solutions Ltd.
$
3,002,669 $ (2,909,607 )
Earnings per common share: Basic and diluted
$ 0.08
$ (0.42 ) Weighted average shares used
to compute earnings per common share Basic and diluted
35,490,097 13,421,955
Pangaea Logistics Solutions Ltd. Consolidated Balance
Sheets September 30, December 31,
2015
2014
Assets (unaudited) Current Assets Cash
and cash equivalents
$ 34,201,299 $ 29,817,507
Restricted cash
1,000,000 1,000,000
Accounts receivable (net of allowance of
$4,542,781 at March 31, 2015 and $4,029,669 at
December 31, 2014)
24,471,012 27,362,216 Bunker inventory
10,014,506
15,601,659 Advance hire, prepaid expenses and other current assets
3,525,542 6,568,234 Vessels held for sale, net
- 4,523,804 Total current
assets
73,212,359 84,873,420 Fixed assets, net
263,117,007 207,667,613 Investment in newbuildings
in-process
18,766,477 38,471,430 Other noncurrent assets
836,112 1,450,802
Total assets $ 355,931,955
$ 332,463,265
Liabilities, convertible redeemable
preferred stock and stockholders' equity
Current liabilities Accounts payable, accrued expenses and
other current liabilities
$ 23,436,236 $ 40,201,794
Related party debt
62,902,322 59,102,077 Deferred revenue
5,469,664 11,748,926 Current portion long-term debt
18,136,172 17,807,674 Line of credit
- 3,000,000
Dividend payable
12,724,825
12,824,825
Total current liabilities
122,669,219 144,685,296 Secured long-term debt, net
115,220,158 87,430,416 Related party long-term debt, net
- - Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.0001 par value,
1,000,000 shares authorized and no shares issued
or outstanding
- -
Common stock, $0.0001 par value,
100,000,000 shares authorized 34,756,980 shares
issued and outstanding at March 31, 2015 and
December 31, 2014
3,574 3,476 Additional paid-in capital
134,327,959 133,955,445 Accumulated deficit
(21,526,300 ) (36,142,727 )
Total Pangaea Logistics Solutions Ltd. equity
112,805,233 97,816,194 Non-controlling interests
5,237,345 2,531,359 Total
stockholders' equity
118,042,578
100,347,553
Total liabilities and stockholders'
equity $ 355,931,955 $
332,463,265
Pangaea
Logistics Solutions Ltd. Consolidated Statements of Cash
Flows Nine months ended September 30 2015
2014
Operating activities Net
(loss) income
$ 18,140,297 $ 4,579,040
Adjustments to reconcile net (loss) income
to net cash provided by operations:
Depreciation and amortization expense
9,457,269
8,415,174 Amortization of deferred financing costs
591,444
627,961 Unrealized loss (gain) on derivative instruments
(672,873 ) 2,123,246 Loss (income) from equity method
investee
(61,357 ) - Provision for doubtful accounts
453,421 (385,010 ) (Gain)/Loss on sales of vessels
638,638 (3,947,600 ) Write off unamortized financing costs
of repaid debt
25,557 241,522 Amortization of discount on
related party long-term debt
- 322,947 Share-based
compensation
372,595 - Change in operating assets and
liabilities: Accounts receivable
2,437,783 14,456,533 Bunker
inventory
5,587,153 22,183 Advance hire, prepaid expenses
and other current assets
3,006,412 1,770,164 Other
non-current assets
- (236,223 )
Account payable, accrued expenses
and other current liabilities
(15,671,505 ) (5,228,037 ) Deferred revenue
(6,279,262 ) (10,292,538 ) Net
cash provided by operating activities
18,025,572 12,469,362
Investing activities
Purchase of vessels
(44,795,804 ) (38,288,452 )
Proceeds from sales of vessels
8,265,179 23,279,387 Deposits
on newbuildings in-process
(3,470,000 ) (6,960,499 )
Drydocking costs
(643,000 ) (3,639,677 ) Purchase of
building and equipment
(59,380 ) (558,376 ) Purchase
from non-controlling interest
(250,000 )
Net cash used in investing activities
(40,953,004 ) (26,167,617 )
Financing
activities Proceeds of related party debt
4,680,001
4,750,000 Payments on related party debt
(1,216,250 )
(54,507 ) Proceeds from long-term debt
46,000,000 35,500,000
Payments of financing and issuance costs
(928,201 )
(366,800 ) Payments on long-term debt
(17,602,405 )
(24,800,657 ) Payments on line of credit
(3,000,000 )
- Common stock dividends paid
(100,000 ) (100,000 )
Distributions from non-controlling
interest
(521,920 ) - Net
cash provided by financing activities
27,311,225 14,928,036
Net increase (decrease) in cash and cash equivalents
4,383,792 1,229,781 Cash and cash equivalents at beginning
of period
29,817,507
18,927,927 Cash and cash equivalents at end of period
$ 34,201,299 $ 20,157,708
Pangaea Logistics
Solutions Ltd. Reconciliation of Adjusted EBITDA and Pro
Forma Adjusted Earnings Per Share Three months ended
September 30, 2015 2014
Adjusted
EBITDA
(unaudited) (unaudited) Income from operations
$ 4,869 $ (1,892 ) Depreciation and amortization
3,195 3,119 Adjusted EBITDA
$
8,064 $ 1,227
Earnings Per
Common Share
Net Income attributable to Pangaea Logistics Solutions Ltd.
3,003 — Net Income attributable to Bulk Partners
(Bermuda) Ltd.
— (2,910 ) less adjustments related to
pre-merger capital structure
— (2,739 ) Total
earnings allocated to common stock
$ 3,003 $
(5,649 ) Weighted average number of common shares
outstanding
35,490,097 13,421,955 Earnings per common share
$ 0.08 $ (0.42 )
Pro Forma
Adjusted EPS
Total Income allocated to common stock
3,003 (5,649 )
Non-GAAP plus adjustments related to pre-merger capital structure
— 2,739 Non-GAAP Pro forma adjusted
total earnings allocated to common stock
$ 3,003
$ (2,910 ) Non-GAAP Pro forma weighted average number
of common shares outstanding
35,490,097 34,696,997 Non-GAAP
Pro forma Adjusted EPS
$ 0.08 $ (0.08 )
INFORMATION ABOUT NON-GAAP FINANCIAL MEASURES. As used
herein, “GAAP” refers to accounting principles generally accepted
in the United States of America. To supplement our consolidated
financial statements prepared and presented in accordance with
GAAP, this earnings release discusses non-GAAP financial measures,
including (1) non-GAAP adjusted EBITDA and (2) non-GAAP pro forma
adjusted earnings per share (“EPS”). These are considered non-GAAP
financial measures as defined in Rule 101 of Regulation G
promulgated by the Securities and Exchange Commission. Generally, a
non-GAAP financial measure is a numerical measure of a company’s
historical or future performance, financial position, or cash flows
that either excludes or includes amounts that are not normally
excluded or included in the most directly comparable measure
calculated and presented in accordance with GAAP. The presentation
of this non-GAAP financial information is not intended to be
considered in isolation or as a substitute for, or superior to, the
financial information prepared and presented in accordance with
GAAP.
We use these non-GAAP financial measures for internal financial
and operational decision making purposes and as a means to evaluate
period-to-period comparisons of the performance and results of
operations of our core business. Our management believes that these
non-GAAP financial measures provide meaningful supplemental
information regarding the performance of our core business by
excluding non-cash losses on impairment of vessels and
non-recurring charges that may not be indicative of our recurring
core business operating results. These non-GAAP financial measures
also facilitate management's internal planning and comparisons to
our historical performance and liquidity. We believe these non-GAAP
financial measures are useful to investors as they allow for
greater transparency with respect to key metrics used by management
in its financial and operational decision making and are used by
our institutional investors and the analyst community to help them
analyze the performance and operational results of our core
business.
Non-GAAP adjusted net income attributable to Pangaea
Logistics Solutions Ltd., Adjusted EBITDA, and pro forma adjusted
EPS. Adjusted net income attributable to Pangaea Logistics
Solutions Ltd. represents net income attributable to Pangaea
Logistics Solutions Ltd. calculated in accordance with GAAP, plus
non-cash losses on impairment of vessels and non-recurring charges.
Adjusted EBITDA represents operating earnings before interest
expense, income taxes, depreciation, amortization and loss on
impairment of vessels. Earnings per share represents total earnings
allocated to common stock divided by the weighted average number of
common shares outstanding. Pro forma adjusted earnings per share
represents adjusted total earnings allocated to common stock
divided by the weighted average number of shares giving effect to
the mergers as if they had been consummated as of January 1,
2014.
There are limitations related to the use of non-GAAP adjusted
net income attributable to Pangaea Logistics Solutions Ltd.,
adjusted EBITDA, and pro forma adjusted EPS versus net income,
income from operations, and EPS calculated in accordance with GAAP.
In particular, Pangaea’s definition of adjusted net income
attributable to Pangaea Logistics Solutions Ltd., adjusted EBITDA,
and pro forma adjusted EPS used here is not comparable to net
income, EBITDA, and EPS. Management provides specific information
in order to reconcile the GAAP or non-GAAP measure to adjusted net
income attributable to Pangaea Logistics Solutions Ltd., adjusted
EBITDA, and pro forma adjusted EPS.
The table set forth above provides a reconciliation of the
non-GAAP financial measures presented to the most directly
comparable financial measures prepared in accordance with GAAP.
About Pangaea Logistics Solutions Ltd.
Pangaea Logistics Solutions Ltd. (NASDAQ:PANL) provides
logistics services to a broad base of industrial customers who
require the transportation of a wide variety of dry bulk cargoes,
including grains, pig iron, hot briquetted iron, bauxite, alumina,
cement clinker, dolomite, and limestone. The Company addresses the
transportation needs of its customers with a comprehensive set of
services and activities, including cargo loading, cargo discharge,
vessel chartering, and voyage planning. Learn more at
www.pangaeals.com.
Forward-Looking Statements
Certain statements in this press release are “forward-looking
statements” within the meaning of the Private Securities Litigation
Act of 1995. These forward-looking statements are based on our
current expectations and beliefs and are subject to a number of
risk factors and uncertainties that could cause actual results to
differ materially from those described in the forward-looking
statements. The Company disclaims any obligation to publicly update
or revise these statements whether as a result of new information,
future events or otherwise, except as required by law. Such risks
and uncertainties include, without limitation, the strength of
world economies and currencies, general market conditions,
including fluctuations in charter rates and vessel values, changes
in demand for dry bulk shipping capacity, changes in our operating
expenses, including bunker prices, dry-docking and insurance costs,
the market for our vessels, availability of financing and
refinancing, charter counterparty performance, ability to obtain
financing and comply with covenants in such financing arrangements,
changes in governmental rules and regulations or actions taken by
regulatory authorities, potential liability from pending or future
litigation, general domestic and international political
conditions, potential disruption of shipping routes due to
accidents or political events, vessels breakdowns and instances of
off-hires and other factors, as well as other risks that have been
included in filings with the Securities and Exchange Commission,
all of which are available at www.sec.gov.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151112006625/en/
Investor RelationsProsek PartnersThomas Rozycki,
212-279-3115 ext. 208trozycki@prosek.com
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