NEWPORT, R.I. - 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 September 30, 2016.  Third Quarter Highlights
  • Net income attributable to Pangaea Logistics Solutions Ltd. was $6.1 million, compared to net income of $3.0 million in the third quarter of 2015
  • Earnings per common share of $0.17 for the third quarter of 2016 compared to earnings per common share of $0.08 in the third quarter of 2015
  • Adjusted EBITDA1 increased to $11.3 million for the third quarter of 2016, compared with $8.1 million for the third quarter of 2015
  • Cash flow from operations was $18.3 million for the nine months ended September 30, 2016, compared with $17.4 million for the nine months ended September 30, 2015
  • At the end of the third quarter, Pangaea had $28.2 million in cash and cash equivalents
Edward Coll, Chairman and Chief Executive Officer of Pangaea Logistics Solutions, commented, “This quarter illustrated the impact that our proactive, asset-right business model can have during challenging market conditions. Net income for the quarter doubled year-over-year, as did earnings per share. We continue to find value in remaining nimble, operating efficiently, and being active while others remain stagnant. Our risk mitigation, prudent approach to cash management, and backhaul strategy will continue to drive our growth as we service our clients, including those in specialized trades such as ice-class, which generated impressive performance this quarter. This strategy, combined with a world-class, highly-experienced team of professionals, will drive our ultimate goal of consistently maximizing shareholder value.” Results for the Three Months Ended September 30, 2016 and 2015 For the three months ended September 30, 2016, the Company reported net income of $6.1 million, or $0.17 per common share compared to net income of $3.0 million, or $0.08 per common share for the same period of 2015. Adjusted EBITDA was $11.3 million in the three months ended September 30, 2016 and $8.1 million for the three months ended September 30, 2015.  The increase was attributable to the success of our business model, coupled with lower cost of bunkers consumed, lower charter hire expense, and a reduction in vessel operating expenses. Pangaea’s strategy of relying on COAs and minimizing risks associated with falling market rates by chartering vessels into our fleet only as necessary to perform under the COAs and firm contracts has continued to serve the Company well. This flexible fleet strategy reduces the risk of idle time in an environment with limited profitable fronthaul employment. In addition, the Company is able to charter-in tonnage at market rates available when contracts are negotiated and positive margins are assured. Total revenue for the three months ended September 30, 2016 was $70.8 million as compared to $71.2 million in 2015. Demand for the Company’s services increased in 2016 but, due to lower market rates, total revenues declined. Total shipping days increased 15% for the three months ended September 30, 2016 over the same period of 2015. Markets Mr. Coll noted, “There is no question we are still in a challenging market environment as our industry struggles with low rates, a disadvantageous supply-demand dynamic for vessels and volatility across a wide range of commodities. However, we are encouraged by the gradual easing we’re seeing for several of these headwinds. And while it would be premature to ascribe too much weight to the recent improvement in rates, we do believe the market is starting to behave more rationally. Irrespective of the day-to-day movement of the indexes, we will continue to operate our business prudently and focus on opportunities to secure above-market rates through our differentiated expertise and business model as we believe that firms who remain proactive during these conditions are well-positioned to benefit from future improvements in the operating environment.” Cash Flows Cash and cash equivalents were $28.2 million as of September 30, 2016, compared with $37.5 million on December 31, 2015. For the nine months ended September 30, 2016, the Company’s net cash provided by operating activities was $18.3 million, compared to $17.4 million for the nine months ended September 30, 2015. Conference Call Details The Company’s management team will host a conference call to discuss the Company’s financial results tomorrow,  November 11, 2016 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# 15286049. 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# 15286049. 1 Adjusted EBITDA is a non-GAAP measure and represents income from operations before depreciation, amortization, loss on impairment and non-recurring items, if applicable.  See Reconciliation of Adjusted EBITDA.
Pangaea Logistics Solutions Ltd. Condensed Consolidated Statements of Income (unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2016 2015 2016 2015
Revenues:
Voyage revenue $ 65,986,320 $ 64,599,552 $ 161,509,615 $ 216,081,290
Charter revenue 4,797,572 6,588,613 10,173,501 15,325,435
70,783,892 71,188,165 171,683,116 231,406,725
Expenses:
Voyage expense 29,166,651 30,392,418 74,434,257 103,845,834
Charter hire expense 19,655,327 20,601,908 43,199,730 60,456,502
Vessel operating expense 7,483,507 8,462,370 22,277,417 23,364,200
General and administrative 3,179,287 3,595,398 9,151,608 11,830,209
Depreciation and amortization 3,532,171 3,195,437 10,576,223 9,457,269
Loss on sale of vessels — 71,882 — 638,638
Total expenses 63,016,943 66,319,413 159,639,235 209,592,652
Income from operations 7,766,949 4,868,752 12,043,881 21,814,073
Other (expense) income:
Interest expense, net (1,258,105) (1,493,536) (4,158,143) (4,184,240)
Interest expense on related party debt (79,712) (110,764) (235,212) (336,493)
Unrealized gain (loss) on derivative instruments 161,002 (513,678) 1,212,434 672,873
Other income (expense) (8,097) 30,000 (42,754) 174,084
Total other expense, net (1,184,912) (2,087,978) (3,223,675) (3,673,776)
Net income 6,582,037 2,780,774 8,820,206 18,140,297
(Income) loss attributable to noncontrolling interests (517,701) 221,895 (1,429,132) (2,077,062)
Net income attributable to Pangaea Logistics Solutions Ltd. $ 6,064,336 $ 3,002,669 $ 7,391,074 $ 16,063,235
Earnings per common share:
Basic $ 0.17 $ 0.08 $ 0.21 $ 0.46
Diluted $ 0.17 $ 0.08 $ 0.21 $ 0.46
Weighted average shares used to compute earnings
per common share
Basic 35,165,532 35,490,097 35,148,793 35,165,169
Diluted 35,347,403 35,490,097 35,299,839 35,165,169
   
Pangaea Logistics Solutions Ltd. Condensed Consolidated Balance Sheets
September 30, 2016 December 31, 2015
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 28,192,492 $ 37,520,240
Restricted cash 6,504,072 2,003,341
Accounts receivable (net of allowance of $4,812,243 at
September 30, 2016 and $5,067,194 at December 31, 2015) 14,811,060 19,617,943
Bunker inventory 9,336,297 7,490,590
Advance hire, prepaid expenses and other current assets 5,150,593 2,679,292
Total current assets 63,994,514 69,311,406
Fixed assets, net 278,821,101 255,145,807
Investments in newbuildings in-process 11,818,000 42,505,783
Total assets $ 354,633,615 $ 366,962,996
Liabilities and stockholders’ equity
Current liabilities
Accounts payable, accrued expenses and other current liabilities $ 19,703,744 $ 22,156,202
Related party debt 12,578,635 13,321,419
Deferred revenue 3,523,305 4,448,795
Current portion long-term debt 18,002,784 19,499,262
Dividend payable 12,624,825 12,724,825
Total current liabilities 66,433,293 72,150,503
Secured long-term debt, net 112,027,117 129,496,153
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; 36,575,171 shares issued and outstanding at September 30, 2016; 36,503,837 shares issued and outstanding and December 31, 2015 3,658 3,650
Additional paid-in capital 133,512,060 133,075,409
Accumulated deficit (17,475,460) (24,866,534)
Total Pangaea Logistics Solutions Ltd. equity 116,040,258 108,212,525
Non-controlling interests 60,132,947 57,103,815
Total stockholders’ equity 176,173,205 165,316,340
Total liabilities and stockholders’ equity $ 354,633,615 $ 366,962,996
   
Pangaea Logistics Solutions Ltd. Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30,
2016 2015
Operating activities
Net income $ 8,820,206 $ 18,140,297
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization expense 10,576,223 9,457,269
Amortization of deferred financing costs 513,311 591,444
Unrealized gain on derivative instruments (1,212,434) (672,873)
Loss (gain) from equity method investee 68,477 (61,357)
Provision for doubtful accounts 982,393 453,421
Loss on sales of vessels — 638,638
Write off unamortized financing costs of repaid debt — 25,557
Share-based compensation 274,286 372,595
Change in operating assets and liabilities:
Increase in restricted cash 499,269 —
Accounts receivable 3,824,491 2,437,783
Bunker inventory (1,845,707) 5,587,153
Advance hire, prepaid expenses and other current assets (2,471,301) 3,006,412
Drydocking costs (42,478) (643,000)
Accounts payable, accrued expenses and other current liabilities (743,918) (15,671,505)
Deferred revenue (925,490) (6,279,262)
Net cash provided by operating activities 18,317,328 17,382,572
Investing activities
Purchase of vessels (319,433) (44,795,804)
Proceeds from sale of vessels — 8,265,179
Deposits on newbuildings in-process (3,053,000) (3,470,000)
Purchase of building and equipment (315,818) (59,380)
Purchase of non-controlling interest — (250,000)
Net cash used in investing activities (3,688,251) (40,310,005)
Financing activities
Proceeds of related party debt 1,522,500 4,680,001
Payments of related party debt (2,500,497) (1,216,250)
Proceeds from long-term debt 1,375,971 46,000,000
Payments of financing and issuance costs (45,755) (928,201)
Payments of long-term debt (20,809,044) (17,602,405)
Payments on line of credit — (3,000,000)
Common stock dividends paid (100,000) (100,000)
Increase in restricted cash (5,000,000) —
Proceeds from non-controlling interests 1,600,000 —
Distribution to non-controlling interest — (521,920)
Net cash (used in) provided by financing activities (23,956,825) 27,311,225
Net (decrease) increase in cash and cash equivalents (9,327,748) 4,383,792
Cash and cash equivalents at beginning of period 37,520,240 29,817,507
Cash and cash equivalents at end of period $ 28,192,492 $ 34,201,299
Disclosure of noncash items
Cash paid for interest $ 3,520,635 $ 3,882,603
   
Pangaea Logistics Solutions Ltd. Reconciliation of Adjusted EBITDA and Adjusted Earnings Per Share
Three Months Ended September 30,
2016 2015
Adjusted EBITDA (in millions)
Income from operations 7,766,949 4,868,752
Depreciation and amortization 3,532,171 3,195,437
Adjusted EBITDA $ 11,299,120 $ 8,064,189
Earnings Per Common Share - basic
Net income attributable to Pangaea Logistics Solutions Ltd. $ 6,064,336 $ 3,002,669
Weighted averag