Pangaea Logistics Solutions Ltd. Reports Financial Results for the Quarter and Full Year Ended December 31, 2016

NEWPORT, R.I., March 22, 2017 /PRNewswire/ -- Pangaea Logistics Solutions Ltd. ("Pangaea" or the "Company") PANL, a global provider of comprehensive maritime logistics solutions, announced today its results for the three months and year ended December 31, 2016.

2016 Highlights

• Net income of $7.5 million for a year characterized as one of the worst in drybulk shipping history.
• Income from operations of $12.9 million, which highlights the Company's unique ability to deliver profits during a weak market by minimizing excess vessel capacity through short-term charter-in commitments.
• Positive cash flow from operations of $19.2 million.
• Cash and cash equivalents totaling $22.3 million at December 31, 2016.

Fourth Quarter Highlights

• Net income of $0.1 million in the fourth quarter of 2016 as compared to a net loss of $4.8 million in the same period of 2015.
• Income from operations of $0.8 million as compared to a loss from operations of $1.3 million in the fourth quarter of 2015.
• Total revenue increased to $66.3 million from $55.9 million in the fourth quarter of 2015.
• Total shipping days increased 18% over the fourth quarter of 2015.
• Vessel operating expense per day decreased 14% to $5,860 per day from $6,852 in the fourth quarter of 2015.

Edward Coll, Chairman and Chief Executive Officer of Pangaea, commented, "Our business risk minimization strategies have kept us profitable as the industry experienced historically strong headwinds during 2016.  We are now seeing industry trends begin to reverse as positive momentum builds within the drybulk shipping segment, and we are well-positioned to capitalize on what we anticipate will be a market resurgence in 2017. Our newbuilding investments and fleet expansion completed in perfect timing with the expected market strengthening, and our track record of profitable operations will help us attract new partners in all parts of our business. We are looking forward to new opportunities and challenges in 2017."

Results for the year and the three months ended December 31, 2016.

For the year ended December 31, 2016, the Company reported net income of $7.5 million or $0.21 per common share¹ compared to net income of $11.3 million, or $0.32 per common share for the previous year. This decline is due to the weakness in the drybulk market during 2016. Charter rates, as measured by the Baltic Dry Index, fell to the lowest point on record in February 2016 and made only a modest recovery as the year progressed. Adjusted EBITDA² in 2016 was $27.0 million, down from $38.6 million in 2015.  Total revenue for the year declined 17.2% to $238.0 million from $287.3 million in 2015, due to lower charter market rates weakness and fewer shipping days, in line with the Company's business strategy.

For the fourth quarter of 2016, the Company reported net income of $0.1 million, up from a net loss of $4.8 million in the fourth quarter of 2015. The market saw some improvement in the fourth quarter as compared to the same period of 2015, evidenced by the increase in total revenue to $66.3 million as compared to $55.9 million, but the increasing cost of bunkers and increasing charter hire rates beginning late in the third quarter put pressure on margins in the fourth quarter. Adjusted EBITDA was $4.3 million, compared with $7.4 million for the fourth quarter of 2015, after adjusting for impairment losses in the 2015 period.

Pangaea's ability to limit the impact of market rates on its operations to remain profitable is a function of its flexible, cargo-focused, business model that uses an optimized mix of owned and chartered-in tonnage. This is different from many other drybulk companies that have large owned fleets and are often forced to employ these fleets on market terms, even if such terms are unprofitable. In contrast, because of its more flexible fleet profile, Pangaea can avoid low-margin or loss-making voyages.

Markets

Mr. Coll commented about the Company's strategy and operations, "We saw marked improvement in charter rates in the second half of the year, as the impacts of vessel scrapping and increased demand for commodities was felt worldwide.  The way to a sustained recovery in the drybulk business will not be straight and fast, but we can quickly adjust our exposure to the market as the inevitable bumps appear on the way to recovery.  We have a proven ability to outperform the market, and to attract financing to grow our business."

Cash Flows

Cash and cash equivalents were $22.3 million as of December 31, 2016, compared with $37.5 million on December 31, 2015.

For the year ended December 31, 2016, the Company's net cash provided by operating activities was $19.2 million, compared to $26.0 million for the year ended December 31, 2015.

For the years ended December 31, 2016 and 2015, net cash used in investing activities was $10.3 million and $64.0 million, respectively.  Net cash used in financing activities was $24.2 million for the year ended December 31, 2016 and net cash provided by financing activities was $45.7 million for the year ended December 31, 2015.  These changes reflect the Company's investment in and purchase of new ice-class ships in 2015, including the m/v Nordic Olympic, the m/v Nordic Odin and the m/v Nordic Oasis. The Company invested $9.6 million in two newbuildings in 2016, which were delivered in January 2017.

Conference Call Details

The Company's management team will host a conference call to discuss the Company's financial results on March 23, 2017 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# 90473986.

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# 90473986.

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^{1 Earnings per share represents total earnings divided by the weighted average number of common shares outstanding.}

^{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 Adjusted Earnings Per Share.}

 

 

 

 

 

 

 

 

 

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 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 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 net income divided by the weighted average number of common shares outstanding.  Adjusted earnings per share represents non-GAAP adjusted net income divided by the weighted average number of shares of common stock.

There are limitations related to the use of non-GAAP adjusted net income attributable to Pangaea Logistics Solutions Ltd., adjusted EBITDA, and 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 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 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. 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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SOURCE Pangaea Logistics Solutions Ltd.