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8-K - FORM 8-K - Pangaea Logistics Solutions Ltd.a8-kforq42019earningspress.htm
EX-99.1 - EXHIBIT 99.1 PRESS RELEASE - Pangaea Logistics Solutions Ltd.a2019earningspressrelease.htm
FOURTH QUARTER 2019  EARNINGS CONFERENCE CALL PRESENTATION 1


 
SAFE HARBOR This presentation includes 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. 2


 
BUSINESS HIGHLIGHTS Q4‐2019 Results •Adjusted EBITDA of $13.5 million Consistent  •Net loss of $4.4 million •$53.1 million cash, restricted cash and cash  Performance equivalents Fleet Working Fleet •20 drybulk ships and one barge in owned and  controlled fleet  Operations Extensive and varied  •Operating 57 vessels on average during Q4‐2019 •6.9 million tons carried; 131 voyages performed  experience for 71 clients  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.  3


 
DRIVERS OF PERFORMANCE Customer Focus:Long‐term, fixed contract employment and recurring business with new and longstanding customers Targeted Business: Specialty tonnage provides superior returns – 40% premium over average market rates in Q4 – 2019 Rate Environment: The Baltic Dry Index average increased in the fourth quarter compared to prior year. Baltic Dry Index (1) 2500 2000 1500 1000 500 0 (1) Per reported indices 4


 
FINANCIAL HIGHLIGHTS • Pangaea's TCE rate of $15,172 for the three months ended December 31, 2019 was $4,353 or  40% over comparable market index averages. • Total revenue increased to $130.5 million for the three months ended December 31, 2019,  from $101.8 million for the three months ended December 13, 2018. • Adjusted EBITDA increased to $13.5 million for the three months ended December 31, 2019,  from $12.2 million for the three months ended December 31, 2018. • At the end of the quarter, Pangaea had $53.1 million in cash, restricted cash and cash  equivalents.  5


 
SELECTED INCOME STATEMENT DATA (in thousands) Three months ended December 31,  Twelve months ended December 31 , 2019 2018 2019 2018 (unaudited) (unaudited) (unaudited) (unaudited) Revenues: Voyage revenue $          118,627 $            85,774 $          365,715 $          319,753 Charter revenue               11,851               16,055               46,483               53,217             130,478             101,829             412,198             372,970 Expenses:    Voyage expense               50,978               40,266             165,479             145,146    Charter hire expense               47,706               35,045             132,950             116,958    Vessel operating expenses               13,106               10,070               45,266               39,830    General and administrative                 5,218                 4,273               17,379               16,484    Depreciation and amortization                 5,008                 4,480               18,529               17,621 Loss on impairment of vessels                 4,751                     ‐                 4,751                     ‐ Loss on sale of vessels                 4,585                     ‐                 4,585                     ‐ Loss on sale and leaseback of vessels                     ‐                     ‐                     ‐                    860 Total expenses             131,351               94,135             388,940             336,900 (Loss)/income from operations                   (873)                 7,694               23,258               36,071 Total other expense, net                (2,137)                (6,518)                (6,209)              (12,089) Net (loss)/income                (3,010)                 1,177               17,049               23,982 Income attributable to noncontrolling interests                (1,389)                (1,795)                (5,391)                (6,225) Net (loss)/income attributable to Pangaea Logistics Solutions Ltd. $             (4,399) $                (618) $            11,658 $            17,757 (1) Adjusted EBITDA  $            13,471 $            12,175 $            51,124 $            54,552 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.  6


 
SELECTED BALANCE SHEET & CASH FLOW DATA (in thousands) December 31, 2019 December 31, 2018  Current Assets     Cash and cash equivalents $                                       50,555 $                          53,615     Accounts receivable, net                                          28,309                             28,482     Other current assets                                          48,091                             31,410  Total current assets                                        126,955                           113,506 Restricted cash                                             2,500                                2,500 Fixed assets, including finance lease right of use assets, net                                        335,090                           337,468                                                                   15,357 Total assets Current liabilities $                                     479,903 $ 453,475 Accounts payable, accrued expenses and other current liabilities $                                       39,974 $                          31,898 Related party debt                                                333                                2,878 Current portion long‐term debt and finance lease liabilities                                          35,540                             25,493 Other current liabilities                                          15,008                             18,781 Total current liabilties                                          90,855                             79,049                                             4,828                                    ‐ Secured long‐term debt and finance lease liabilities, net                                        141,148                           141,059 TotalOther Pangaea long ‐Logisticsterm liabilities Solutions Ltd. equity                                        170,246                           161,688 Non‐controlling interests                                          72,826                             71,679 Total stockholders' equity                                        243,072                           233,367 Total liabilities and stockholders' equity$                                      479,903 $                        453,475 Cash flows for the years ended:$ December   31,   2019 44,459 $December   31, 40,135 2018 Net cash used in investing activities $ (46,602) $ (17,510) Net cash used in financing activities $ (916) $ (5,042) Net cash provided by operating activities The amounts in the table above have been calculated based on unrounded numbers. Accordingly, certain amounts may not sum due to the effect of rounding.  7


 
TOTAL SHIPPING DAYS  6,000  5,000  4,000 3,365  2,750   3,000 2,645  2,556  Days 2,537  2,220  1,904  1,742   2,000  1,000 1,820  1,886  1,575  1,620  1,638  1,703  1,731  1,718   ‐ Q1‐18 Q2‐18 Q3‐18 Q4‐18 Q1‐19 Q2‐19 Q3‐19 Q4‐19 Owned Days Charter‐in Days Capital Efficiency: Leveraged owned fleet by chartering‐in market vessels Flexibility: Short‐term charters allow us to react quickly and take advantage of arbitrage opportunities 8


 
PANGAEA TCE v. AVERAGE MARKET TCE  $18,000 16%  $16,000 40% 24% $2,187  30% 32% 21%  $14,000 49 $2,801  $4,353  $2,440  68%  $12,000 $3,187  $3,355  $4,268   $10,000 $4,869   $8,000 $13,728   $6,000 $11,395  $11,559  $10,662  $10,373  $10,819   $4,000 $8,665  $7,160   $2,000  $‐ Q1 ‐ 2018 Q2 ‐ 2018 Q3 ‐ 2018 Q4 ‐ 2018 Q1‐2019 Q2‐2019 Q3‐2019 Q4‐2019 Pangaea TCE      $13,849              $13,728            $13,835             $14,360               $12,029               $12,933            $15,915  $15,172  Consistently outperforming against average Panamax and Supramax index *Average of the published Panamax and Supramax index net of commission 9


 
FINANCIAL PERFORMANCE Q1‐2018 THROUGH Q4‐2019 ADJUSTED EBITDA(1) TCE (2)   20,000,000  $18,000  18,000,000  $16,000  16,000,000  $14,000  14,000,000  $12,000  12,000,000  $10,000  10,000,000  $8,000  8,000,000  $6,000  6,000,000  4,000,000  $4,000  2,000,000  $2,000  ‐  $‐ Q1‐18 Q2‐18 Q3‐18 Q4‐18 Q1‐19 Q2‐19 Q3‐19 Q4‐19 Q1‐18 Q2‐18 Q3‐18 Q4‐18 Q1‐19 Q2‐19 Q3‐19 Q4‐19 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 vessels, and when  applicable, loss on impairment of vessels and certain non‐recurring items.  2) TCE is defined as total revenues less voyage expenses divided by the number of shipping days, which is consistent with industry standards. TCE rate is a common shipping industry  performance measure used primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charter  hire rates for vessels on voyage charters are generally not expressed in per‐day amounts while charter hire rates for vessels on time charters generally are expressed in per‐day  amounts. 10


 
ADJUSTED EARNINGS PER COMMON SHARE Adjusted EPS total of $0.42 for 2019 Historical Adjusted EPS (1)  0.25 $0.43 $0.52 $0.42  0.20 0.20  0.18  0.18   0.15 0.14   0.10 0.11  0.10  0.10  0.10  0.09  0.09   0.05 0.05  0.03   ‐ Q1‐17 Q2‐17 Q3‐17 Q4‐17 Q1‐18 Q2‐18 Q3‐18 Q4‐18 Q1‐19 Q2‐19 Q3‐19 Q4‐19 (1) 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, gains and losses on derivative instruments, and certain non‐recurring charges, divided by the weighted average  number of shares of common stock. 11