Pangaea Logistics Solutions Ltd. (“Pangaea” or the “Company”) (NASDAQ: PANL), a global provider of comprehensive maritime logistics solutions, announced today its results for the year ended December 31, 2014.
2014 Full Year Highlights
- Record revenue of $398.3 million for the year ended December 31, 2014
- Net loss attributable to Pangaea Logistics Solutions Ltd. of $12.1 million for the year ended December 31, 2014
- Non-GAAP adjusted net income attributable to Pangaea Logistics Solutions Ltd.1 of $1.1 million for the year ended December 31, 2014
- Adjusted EBITDA2 of $20.7 million for the year ended December 31, 2014
- A 7% increase in total ship days and a 9% increase in voyage days in 2014 over 2013, demonstrating increasing demand for services
- Average time charter equivalent rates of $12,317 per day for the year ended December 31, 2014
- Public listing on NASDAQ in October 2014 via merger
- Delivery of three new ice-class 1A panamax dry bulk carriers including the m/v Nordic Oshima in September 2014, and m/v Nordic Olympic and m/v Nordic Odin in February 2015
- Signed new long-term contracts of affreightment (“COAs”) to further support its ice-class fleet
Edward Coll, Chairman and Chief Executive Officer of Pangaea, stated, “Pangaea was able to achieve nearly $400 million in revenue in 2014 despite the continued weakness of the dry bulk rate environment. In the face of headwinds related to the sector operating at historic lows, we have advantageously strengthened our core businesses in backhaul and the ice-class trades to position the Company for profitability and continued growth. This is best illustrated by the new contracts we have recently announced, which complement our business strategy and will add incremental profit to the bottom line.”
Results for the Full Year Ended December 31, 2014
The Company had a net loss attributable to Pangaea Logistics Solutions Ltd. of $12.1 million for the year ended December 31, 2014, which includes non-cash losses on impairment of vessels and other non-recurring charges totaling $13.2 million, compared to net income attributable to Pangaea Logistics Solutions Ltd. of $15.5 million for the year ended December 31, 2013. This decrease in income was primarily caused by a general downturn in the shipping markets and the losses on impairment of vessels, and costs incurred as a publicly traded company in 2014.
“We will continue to look for opportunities in both the charter and purchase and sale markets, as we continue to navigate this prolonged market downturn,” Coll continued. “We remain confident that our distinctive ice-class and backhaul businesses will provide positive operating cash flows despite broader market trends. We remain focused on optimizing our owned and chartered fleet commitments, controlling costs, and conserving cash.”
Cash Flows
Cash and cash equivalents were $29.8 million as of December 31, 2014, compared with $18.9 million on December 31, 2013.
For the year ended December 31, 2014, the Company’s net cash provided by operating activities was $24.6 million, compared to $21.1 million for the year ended December 31, 2013.
For the years ended December 31, 2014 and 2013, net cash used in investing activities was $39.2 million and $84.0 million, respectively. Net cash provided by financing activities was $25.5 million and $62.1 million for the years ended December 31, 2014 and 2013, respectively. This reflects increased borrowing to finance the purchase of additional vessels, including the m/v Nordic Oshima.
“We gratefully acknowledge the continued participation of our long-time lender, DVB Bank, and our other banking partners, in the financing of our latest newbuilding deliveries,” Coll added.
The Company also announced that it determined that it was in the mutual best interests of ASO 2020 Maritime and the Company not to undertake the transaction proposed in the October 2014 letter of intent.
1 Adjusted net income attributable to Pangaea Logistics Solutions Ltd. is a non-GAAP measure. Adjusted net income attributable to Pangaea Logistics Solutions Ltd. represents net (loss) income attributable to Pangaea Logistics Solutions Ltd. before loss on impairment of vessels and non-recurring charges. See Reconciliation of Adjusted Net Income, Adjusted EBITDA, 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, loss on impairment of vessels and other non-operating income and/or expense, if any. See Reconciliation of Adjusted Net Income, Adjusted EBITDA, Pro Forma Adjusted Earnings Per Share.
Pangaea Logistics Solutions Ltd. | ||||||||||
| Year ended December 31, | ||||||||||
| 2014 | 2013 | |||||||||
| Revenues: | ||||||||||
| Voyage revenue | $ | 345,235,869 | $ | 336,160,290 | ||||||
| Charter revenue | 53,040,336 | 56,310,682 | ||||||||
| 398,276,205 | 392,470,972 | |||||||||
| Expenses: | ||||||||||
| Voyage expense | 189,474,578 | 196,035,698 | ||||||||
| Charter hire expense | 149,653,797 | 130,879,639 | ||||||||
| Vessel operating expenses | 29,583,386 | 22,958,049 | ||||||||
| General and administrative | 12,831,330 | 11,599,121 | ||||||||
| Depreciation and amortization | 11,668,128 | 9,614,859 | ||||||||
| Loss on impairment of vessels | 11,506,631 | - | ||||||||
| Gain on sale of vessels | (3,947,600 | ) | - | |||||||
| Total expenses | 400,770,250 | 371,087,366 | ||||||||
| (Loss) income from operations | (2,494,045 | ) | 21,383,606 | |||||||
| Other income (expense): | ||||||||||
| Interest expense, net | (5,644,057 | ) | (5,487,246 | ) | ||||||
| Interest expense related party debt | (263,648 | ) | (411,784 | ) | ||||||
| Imputed interest on related party long-term debt | (322,946 | ) | (1,117,231 | ) | ||||||
| Unrealized (loss) gain on derivative instruments | (1,230,132 | ) | 1,101,239 | |||||||
| Other (expense) income | (3,693,118 | ) | 45,937 | |||||||
| Total other expense, net | (11,153,901 | ) | (5,869,085 | ) | ||||||
| Net (loss) income | (13,647,946 | ) | 15,514,521 | |||||||
| Loss (income) attributable to non-controlling interests | 1,519,497 | (62,152 | ) | |||||||
| Net (loss) income attributable to Pangaea Logistics Solutions Ltd. | $ | (12,128,449 | ) | $ | 15,452,369 | |||||
| (Loss) earnings per common share: | ||||||||||
| Basic | $ | (1.61 | ) | $ | (0.65 | ) | ||||
| Diluted | $ | (1.61 | ) | $ | (0.65 | ) | ||||
| Weighted average shares used to compute (loss) earnings | ||||||||||
| per common share | ||||||||||
| Basic and diluted | 18,726,308 | 13,421,955 | ||||||||
Pangaea Logistics Solutions Ltd. | ||||||||||
| December 31, 2014 | December 31, 2013 | |||||||||
| Assets | ||||||||||
| Current Assets | ||||||||||
| Cash and cash equivalents | $ | 29,817,507 | $ | 18,927,927 | ||||||
| Restricted cash | 1,000,000 | 500,000 | ||||||||
| Accounts receivable (net of allowance of $4,029,669 at | ||||||||||
| December 31, 2014 and $1,662,593 at December 31, 2013) | 27,362,216 | 44,688,470 | ||||||||
| Bunker inventory | 15,601,659 | 21,072,192 | ||||||||
| Advance hire, prepaid expenses and other current assets | 6,568,234 | 12,877,771 | ||||||||
| Vessels held for sale, net | 4,523,804 | - | ||||||||
| Total current assets | 84,873,420 | 98,066,360 | ||||||||
| Fixed assets, net | 207,667,613 | 197,153,889 | ||||||||
| Investment in newbuildings in-process | 38,471,430 | 31,900,000 | ||||||||
| Other noncurrent assets | 1,450,802 | 3,253,022 | ||||||||
| Total assets | $ | 332,463,265 | $ | 330,373,271 | ||||||
| Liabilities, convertible redeemable preferred stock | ||||||||||
| and stockholders' equity | ||||||||||
| Current liabilities | ||||||||||
| Accounts payable, accrued expenses and other current liabilities | $ | 40,201,794 | $ | 45,878,378 | ||||||
| Related party debt | 59,102,077 | 7,616,248 | ||||||||
| Deferred revenue | 11,748,926 | 16,155,498 | ||||||||
| Current portion long-term debt | 17,807,674 | 16,065,483 | ||||||||
| Line of credit | 3,000,000 | 3,000,000 | ||||||||
| Dividend payable | 12,824,825 | 23,177,503 | ||||||||
| Total current liabilities | 144,685,296 | 111,893,110 | ||||||||
| Secured long-term debt, net | 87,430,416 | 83,302,421 | ||||||||
| Related party long-term debt, net | - | 17,303,918 | ||||||||
| Commitments and contingencies | ||||||||||
| Convertible redeemable preferred stock of Bulk Partners (Bermuda) Ltd., | ||||||||||
| net of issuance costs ($1,000 par value, 112,500 shares | ||||||||||
| authorized, 0 and 89,114 shares issued and outstanding at | ||||||||||
| December 31, 2014 and 2013, respectively | - | 103,236,399 | ||||||||
| 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 December 31, 2014, | ||||||||||
| 13,421,955 shares issued and outstanding at December 31, 2013 | 3,476 | 1,342 | ||||||||
| Additional paid-in capital | 133,955,445 | 85,987 | ||||||||
| Accumulated deficit | (36,142,727 | ) | (5,933,870 | ) | ||||||
| Total Pangaea Logistics Solutions Ltd. equity (deficit) | 97,816,194 | (5,846,541 | ) | |||||||
| Non-controlling interests | 2,531,359 | 20,483,964 | ||||||||
| Total stockholders' equity | 100,347,553 | 14,637,423 | ||||||||
| Total liabilities, convertible redeemable preferred stock | ||||||||||
| and stockholders' equity | $ | 332,463,265 | $ | $330,373,271 | ||||||
Pangaea Logistics Solutions, Ltd. | |||||||||||
| Years Ended December 31, | |||||||||||
| 2014 | 2013 | ||||||||||
| Operating activities | |||||||||||
| Net (loss) income | $ | (13,647,946 | ) | $ | 15,514,521 | ||||||
| Adjustments to reconcile net (loss) income to net cash | |||||||||||
| provided by operations: | |||||||||||
| Depreciation and amortization expense | 11,668,128 | 9,614,859 | |||||||||
| Amortization of deferred financing costs | 954,604 | 949,929 | |||||||||
| Unrealized loss (gain) on derivative instruments | 1,230,132 | (1,101,239 | ) | ||||||||
| Loss (income) from equity method investee | 265,443 | (10,224 | ) | ||||||||
| Provision for doubtful accounts | 2,764,836 | 652,318 | |||||||||
| Gain on sales of vessels | (3,947,600 | ) | - | ||||||||
| Charge for impairment of vessels | 11,506,631 | - | |||||||||
| Write off unamortized financing costs of repaid debt | 471,834 | - | |||||||||
| Amortization of discount on related party long-term debt | 322,946 | 1,117,231 | |||||||||
| Share-based compensation | 1,816 | - | |||||||||
| Change in operating assets and liabilities: | |||||||||||
| Increase in restricted cash | (500,000 | ) | - | ||||||||
| Accounts receivable | 14,561,418 | (15,445,496 | ) | ||||||||
| Bunker inventory | 5,470,533 | (7,215,740 | ) | ||||||||
| Advance hire, prepaid expenses and other current assets | 4,291,713 | (2,643,908 | ) | ||||||||
| Account payable, accrued expenses and other current liabilities | (6,413,198 | ) | 16,952,155 | ||||||||
| Deferred revenue | (4,406,572 | ) | 2,733,051 | ||||||||
| Net cash provided by operating activities | 24,594,718 | 21,117,457 | |||||||||
| Investing activities | |||||||||||
| Purchase of vessels | (43,914,439 | ) | (49,736,191 | ) | |||||||
| Proceeds from sales of vessels | 23,279,387 | - | |||||||||
| Deposits on newbuildings in-process | (13,101,430 | ) | (31,900,000 | ) | |||||||
| Drydocking costs | (4,880,041 | ) | (731,285 | ) | |||||||
| Purchase of building and equipment | (560,955 | ) | (112,899 | ) | |||||||
| Deposits on vessel purchase | - | (1,500,000 | ) | ||||||||
| Net cash used in investing activities | (39,177,478 | ) | (83,980,375 | ) | |||||||
| Financing activities | |||||||||||
| Proceeds from mergers | 5,035,636 | - | |||||||||
| Proceeds of related party debt | 17,651,149 | 29,554,972 | |||||||||
| Payments on related party debt | (225,291 | ) | (5,274,075 | ) | |||||||
| Proceeds from long-term debt | 35,500,000 | 32,205,000 | |||||||||
| Payments of financing and issuance costs | (484,380 | ) | (1,799,314 | ) | |||||||
| Payments on long-term debt | (30,051,021 | ) | (14,401,426 | ) | |||||||
| Merger costs | (1,853,753 | ) | - | ||||||||
| Proceeds from issuance of convertible redeemable preferred stock | - | 21,899,180 | |||||||||
| Common stock dividends paid | (100,000 | ) | (100,000 | ) | |||||||
| (Increase) decrease in restricted cash | 187,500 | ||||||||||
| Distributions to non-controlling interest | - | (176,667 | ) | ||||||||
| Net cash provided by financing activities | 25,472,340 | 62,095,170 | |||||||||
| Net increase (decrease) in cash and cash equivalents | 10,889,580 | (767,748 | ) | ||||||||
| Cash and cash equivalents at beginning of period | 18,927,927 | 19,695,675 | |||||||||
| Cash and cash equivalents at end of period | $ | 29,817,507 | $ | 18,927,927 | |||||||
Pangaea Logistics Solutions, Ltd. | |||||||||||
| Year ended December 31, | |||||||||||
| (In thousands of U.S. Dollars except for share and per share data) | 2014 | 2013 | |||||||||
Net (loss) income attributable to Pangaea Logistics Solutions Ltd. and Adjusted net | |||||||||||
income attributable to Pangaea Logistics Solutions Ltd. | |||||||||||
| Net (loss) income attributable to Pangaea Logistics Solutions Ltd. | $ | (12,128 | ) | $ | 15,452 | ||||||
| Non-GAAP | |||||||||||
| plus loss on impairment of vessels | 11,507 | - | |||||||||
| plus non-recurring charges | 1,699 | - | |||||||||
| Non-GAAP Adjusted net income attributable to Pangaea Logistics Solutions Ltd. | $ | 1,077 | $ | 15,452 | |||||||
Adjusted EBITDA | |||||||||||
| (Loss) income from operations | $ | (2,494 | ) | $ | 21,384 | ||||||
| Non-GAAP | |||||||||||
| plus depreciation & amortization | 11,668 | 9,615 | |||||||||
| plus loss on impairment of vessels | 11,507 | - | |||||||||
| Non-GAAP Adjusted EBITDA | $ | 20,681 | $ | 30,999 | |||||||
(Loss) Per Common Share | |||||||||||
| Net (loss) income attributable to Pangaea Logistics Solutions Ltd. | (12,128 | ) | |||||||||
| Net income attributable to Bulk Partners (Bermuda) Ltd. | 15,452 | ||||||||||
| less adjustments related to pre-merger capital structure | (18,080 | ) | (24,241 | ) | |||||||
| Total (loss) allocated to common stock | $ | (30,209 | ) | $ | (8,788 | ) | |||||
| Weighted average number of common shares outstanding | 18,726,308 | 13,421,955 | |||||||||
| (Loss) per common share | $ | (1.61 | ) | $ | (0.65 | ) | |||||
Pro Forma Adjusted EPS | |||||||||||
| Total (loss) allocated to common stock | $ | (30,209 | ) | $ | (8,788 | ) | |||||
| Non-GAAP | |||||||||||
| plus loss on impairment of vessels | 11,507 | - | |||||||||
| plus non-recurring charges | 1,699 | - | |||||||||
| plus adjustments related to pre-merger capital structure | 18,080 | 24,241 | |||||||||
| Non-GAAP Pro forma adjusted total earnings allocated to common stock | $ | 1,077 | $ | 15,542 | |||||||
| Non-GAAP Pro forma weighted average number of common shares outstanding | 34,697,161 | 34,696,997 | |||||||||
| Non-GAAP Pro forma adjusted EPS | $ | 0.03 | $ | 0.45 | |||||||
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 net (loss) income attributable to Pangaea Logistics Solutions Ltd. (2) non-GAAP adjusted EBITDA and (3) 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. Is defined represents as net (loss) 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/(loss) per share represents total earnings/(loss) allocated to common stock divided by the weighted average number of common shares outstanding. Pro forma adjusted earnings/(loss) per share represents adjusted total earnings/(loss) 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, 2013.
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. 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.
Contacts:
Prosek Partners
Thomas
Rozycki, 212-279-3115 x 208
Managing Director
trozycki@prosek.com
