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 June 30, 2017. 2nd Quarter 2017 Highlights          
  • Increase in revenue from $57.0 million to $91.4 million (61%) from Q2 2016 to Q2 2017.
  • Adjusted EBITDA1 of $7.4 million, excluding a $4.9 million loss on sale and leaseback of the m/v Bulk Beothuk2, as compared to $4.3 million for the same period of last year.
  • Pangaea’s TCE rates increased 30% and total shipping days increased 35% due to continued growth in the drybulk market and to an increase in drybulk market rates. The BDI, a measure of drybulk performance, increased to an average of 1,096 for the second quarter of 2017 versus 563 for the same period of 2016.
  • At the end of the quarter, Pangaea had $29.4 million in unrestricted cash and cash equivalents after acquiring the m/v Bulk Freedom on June 14, 2017. Cash includes $8.3 million net proceeds from the issuance of common stock in a private placement transaction completed on June 26, 2017.
Results for the three months ended June 30, 2017 For the second quarter of 2017, the Company reported a net loss of $4.7 million, compared to net income of $0.1 million in the second quarter of 2016. The 2017 net loss includes a $4.9 million loss on the sale and leaseback of the vessel m/v Bulk Beothuk. There was no such loss in the comparable period of 2016. Drybulk market demand and market rates improved considerably in the second quarter as compared to the same period of 2016, which is evidenced by the increase in total revenue to $91.4 million for the three months ended June 30, 2017, compared to $57.0 million for the three months ended June 30, 2016. These improvements also helped push total shipping days up 35% to 4,661 in the three months ended June 30, 2017, compared to 3,457 for the same period in 2016.  Adjusted EBITDA1 was $7.4 million, compared with $4.3 million for the second quarter of 2016. Pangaea’s cargo-focused, business model is founded on a mix of short and long term backhaul cargo charters.  Pangaea matches these charters with a fleet of owned and chartered-in tonnage.  When the Company contracts for future cargo service, the Company may use freight forward agreements to limit exposure to intervening shifts in rates and to secure margins. Use of these FFAs and bunker fuel swaps, which were not designated for hedge accounting, resulted in a net unrealized loss on derivative instruments of $1.5 million in the three months ended June 30, 2017 as compared to a net unrealized gain of $1.4 million in the same period of 2016. During the quarter, the Company refinanced the m/v Bulk Beothuk through a sale and leaseback transaction. This resulted in a net increase in cash from the sale and repayment of the loan, and also from the release of restricted cash. The Company also issued 3,935,665 shares of common stock in a private placement transaction for aggregate net proceeds of $8.3 million, which together with the sale and leaseback, enabled the Company to acquire the m/v Bulk Freedom. “Under the backdrop of a stabilizing dry bulk industry, we reported strong second quarter results highlighted by significant increases in revenue, TCE rates, shipping days and Adjusted EBITDA. This is particularly encouraging for this period, which tends to be softer following our ice season. Furthermore, the equity raise in the quarter positions us to advance several strategic initiatives, including acquisition of dry bulk vessels and expansion of our logistics services, among others. To that end, the sale and bareboat charterback of m/v Bulk Beothuk freed up enough cash for the Company to acquire the m/v Bulk Freedom in a second hand market that is still depressed. Timing our acquisitions to take advantage of the lag between market recovery and valuation recovery is an essential part of our strategy to increase tonnage while limiting leverage and ultimately unlock shareholder value.” Cash Flows Cash and cash equivalents were $29.4 million as of June 30, 2017, compared with $22.3 million on December 31, 2016. For the six months ended June 30, 2017, the Company’s net cash provided by operating activities was $8.4 million, compared to $10.0 million for the six months ended June 30, 2016. For the six months ended June 30, 2017 and 2016, net cash used in investing activities was $47.7 million and $0.4 million, respectively.  Net cash provided by financing activities was $46.5 million for the six months ended June 30, 2017 and net cash used for financing activities was $14.6 million for the six months ended June 30, 2016.  These changes reflect the Company’s investment in and purchase of vessels, including the m/v Bulk Destiny and m/v Bulk Beothuk, which were financed under sale and leaseback arrangements; and the m/v Bulk Endurance and the m/v Bulk Freedom, which were financed under commercial loan facilities. The Company also noted that the private placement of common stock to inside investors, as previously announced in a Current Report on Form 8-K, was completed on August 9, 2017. The Company issued 2,597,778 shares for cash proceeds of $1.5 million and a $4.4 million reduction in dividends payable. Conference Call Details The Company’s management team will host a conference call to discuss the Company’s financial results on August 15, 2017 at 8:00 a.m., Eastern Time (ET).  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# 68208235. 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 two weeks and can be accessed by calling (800) 585-8367 (domestic) or (404) 537-3406 (international) and referencing ID# 68208235. 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.  See Reconciliation of  (Loss) Income from Operations to Adjusted EBITDA. 2 Accounted for as a capital lease under US Generally Accepted Accounting Principles.  
Pangaea Logistics Solutions Ltd. Consolidated Statements of Operations
Three Months Ended June 30, Six Months Ended  June 30,
2017 2016 2017 2016
Revenues:
Voyage revenue $ 80,231,015 $ 53,548,976 $ 157,919,464 $ 95,523,295
Charter revenue 11,192,763 3,412,729 17,959,435 5,375,929
91,423,778 56,961,705 175,878,899 100,899,224
Expenses:
Voyage expense 38,597,148 26,766,724 79,869,067 45,267,606
Charter hire expense 33,174,063 15,041,229 56,375,218 23,544,403
Vessel operating expense 9,074,357 7,904,828 17,665,599 14,793,910
General and administrative 3,141,276 2,935,950 6,656,040 5,972,321
Depreciation and amortization 3,711,712 3,528,596 7,653,507 7,044,052
Loss on sale and leaseback of vessels 4,915,044 — 9,205,042 —
Total expenses 92,613,600 56,177,327 177,424,473 96,622,292
(Loss) income from operations (1,189,822) 784,378 (1,545,574) 4,276,932
Other income (expense):
Interest expense, net (2,244,110) (1,530,425) (3,875,098) (2,900,038)
Interest expense on related party debt (78,846) (75,010) (156,825) (155,500)
Unrealized (loss) gain on derivative instruments, net (1,476,380) 1,387,391 490,007 1,051,432
Other income (expense) 813,356 67,661 908,006 (34,657)
Total other expense, net (2,985,980) (150,383) (2,633,910) (2,038,763)
Net (loss) income (4,175,802) 633,995 (4,179,484) 2,238,169
(Income) loss attributable to non-controlling interests (561,379) (504,361) 789,146 (911,431)
Net (loss) income attributable to Pangaea Logistics Solutions Ltd. $ (4,737,181) $ 129,634 $ (3,390,338) $ 1,326,738
(Loss) earnings per common share:
Basic $ (0.13) $ — $ (0.10) $ 0.04
Diluted $ (0.13) $ — $ (0.10) $ 0.04
Weighted average shares used to compute (loss) earnings
per common share
Basic 35,539,186 35,150,453 35,411,060 35,140,332
Diluted 35,539,186 35,337,290 35,411,060 35,269,824
     
Pangaea Logistics Solutions Ltd. Consolidated Balance Sheets
June 30, 2017 December 31, 2016
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 29,436,482 $ 22,322,949
Restricted cash 4,000,000 6,100,000
Accounts receivable (net of allowance of $4,283,826 at June 30, 2017 and $4,752,265 at December 31, 2016) 26,653,536 20,476,797
Bunker inventory 14,944,785 13,202,937
Advance hire, prepaid expenses and other current assets 9,931,653 6,441,583
Total current assets 84,966,456 68,544,266
Fixed assets, net 293,793,460 275,265,672
Investments in newbuildings in-process — 18,383,964
Vessels under capital lease 30,576,925 —
Total assets $ 409,336,841 $ 362,193,902
Liabilities and stockholders’ equity
Current liabilities
Accounts payable, accrued expenses and other current liabilities $ 29,342,760 $ 23,231,179
Related party debt 6,850,173 15,972,147
Deferred revenue 6,905,467 6,422,982
Current portion of secured long-term debt 18,343,971 19,627,846
Current portion of capital lease obligations 1,733,509 —
Dividend payable 12,624,825 12,624,825
Total current liabilities 75,800,705 77,878,979
Secured long-term debt, net 117,689,641 107,637,851
Obligations under capital lease 25,921,758 —
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; 41,197,404 shares issued and outstanding at June 30, 2017; 36,590,417 shares issued and outstanding at December 31, 2016 4,120 3,659
Additional paid-in capital 148,888,160 133,677,321
Accumulated deficit (20,799,954) (17,409,579)
Total Pangaea Logistics Solutions Ltd. equity 128,092,326 116,271,401
Non-controlling interests 61,832,411 60,405,671
Total stockholders’ equity 189,924,737 176,677,072
Total liabilities and stockholders’ equity $ 409,336,841 $ 362,193,902
     
Pangaea Logistics Solutions Ltd. Consolidated Statements of Cash Flows
Six Months Ended June 30,
2017 2016
Operating activities
Net (loss) income $ (4,179,484) $ 2,238,169
Adjustments to reconcile net (loss) income to net cash provided by operations:
Depreciation and amortization expense 7,653,507 7,044,052
Amortization of deferred financing costs 368,387 354,431
Amortization of prepaid rent 60,969 —
Unrealized loss (gain) on derivative instruments (490,007) (1,051,432)
(Gain) loss from equity method investee (194,612) 30,380
(Recovery of) provision for doubtful accounts (10,356) 931,962
Loss on sale and leaseback of vessel 9,134,908 —
Share-based compensation 677,936 176,068
Change in operating assets and liabilities:
Decrease in restricted cash — 500,000
Accounts receivable (6,166,383) 4,205,465
Bunker inventory (1,741,848) (900,310)
Advance hire, prepaid expenses and other current assets (3,343,536) (1,082,336)
Drydocking costs (754,120) (42,478)
Accounts payable, accrued expenses and other current liabilities 6,853,566 (2,319,659)
Deferred revenue 482,485 (99,238)
Net cash provided by operating activities 8,351,412 9,985,074
Investing activities
Purchase of vessels (46,846,313) (402,432)
Purchase of building and equipment (16,775) (30,000)
Purchase of non-controlling interest in consolidated subsidiary (832,572) —
Net cash used in investing activities (47,695,660) (432,432)
Financing activities
Payments of related party debt — (2,500,946)
Proceeds from long-term debt 25,000,000 1,096,000
Payments of financing and issuance costs (876,542) (34,425)
Payments of long-term debt (15,723,929) (13,110,553)
Proceeds from sale and leaseback of vessel 28,000,000 —
Payments of capital lease obligations (344,733) —
Decrease in restricted cash 2,100,000 —
Proceeds from private placement of common stock, net of issuance costs 8,302,985 —
Accrued common stock dividends paid — (100,000)
Net cash provided by (used in) financing activities 46,457,781 (14,649,924)
Net increase (decrease) in cash and cash equivalents 7,113,533