PANL - Earnings call transcript Q4 2019 | Pangaea Logistics Solutions, Ltd.

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Operator

Good morning. My name is Laurie and I'll be your conference operator today. At this time, I would like to welcome everyone to the Pangaea Logistics Solutions’ Fourth Quarter 2019 Earnings Teleconference.

Our host for today's call are Mr. Ed Coll, Chairman and Chief Executive Officer; and Mr. Financial Chief Signore, Del Officer. Gianni

XXX-XXX-XXXX being Today's after question-and-answer number for can XXXXXXX. will XXX-XXX-XXXX the dialing available instructions]. All live lines muted. remarks, and beginning call be and at And ID by recording prepared is a replay The XX:XX be Time. there session. or be currently recorded [Operator AM referencing domestic for are accessed international Eastern will

Partners. to now my turn Tiya pleasure Gulanikar over Prosek is It the with to floor

Tiya Gulanikar

you, you earnings this call With Thank thank Mr. morning's and Financial fourth company for Solutions. Ed for And joining us CEO, Chief the Officer, Laurie. for Logistics Chairman from quarter conference us Mr. and Coll; Signore. are Gianni XXXX today Pangaea Del

call the to to the like over Safe statement. I'd read Ed, Before I Harbor turn

conference statements contain Litigation Act the of the Solutions. of about forward-looking Reform meaning Private Pangaea Logistics Securities XXXX could This within

not statements of the historical statements and Forward-looking on differ facts. cause based uncertainties are Solutions’ which Logistics statements. Pangaea beliefs forward-looking Such subject current results forward-looking and could management that to statements from to actual are risks upon based and are the are the expectations

the on at supplemental section slide evening’s was found website www.pangaeals.com call. to Solutions’ Such the be last of Commission. that discussed the fully will are filed a Pangaea with be that update available in attached Pangaea sec.gov. Logistics or herein Company Those Filings, in of which risks. please conference Exchange assume such risks Also, X-K Securities can obligation is the Investors release, on information understood not and The under this the Logistics SEC’s any forth more set light recall presentation accompany call. information filings to should in does this slides Solutions contained with

like Ed CEO, turn Logistics I Chairman Ed? to Now, Pangaea Coll, over the Mr. Solutions’ call to would and

Ed Coll

call I’ll This on joining of more to Thanks, a and you our provide market our operations thank Tiya, the over for the call. to morning good of the you quarter an and CFO, overall morning, to overview fourth and us financials. update turning Gianni, detailed the all of provide before

We line the open will for then questions.

our I had about allow our the our talk way market about please coronavirus to me year and impact fiscal XXXX, address the Before on that. we're talk results has and approaching

is hope I’m offices, I territory familiar families of our our for is you I difficult are of storm. think people all waiting the business us. it from precaution every out the the for mostly and most is XXXX taking which of times. your very all safely as and Across best this home, working time of we're in a

minor the of impact to Overall, for the delays are year, and shipping week this tightened be perhaps now start our bulks a to market resilient position virus the global and moving response is now a in little. certain in to to points After ports supply pandemic. just attempting the certain has

hope much for economy downturn However, if at the only recovery. closing we time, the comes, for same may down of a which a be inevitable, we're prepared world can which quick it

Our Board past the assisted sold and months. next on the more has buying few payment our to have over those wisely decision dividend deferred we replace we ships have

customers issued adjust use to continue our risk feel business businesses closely support We'll We to which but work our model We will try we resourceful to had conserve the moving. quickly be to flexible and accompanying and last our hope our cash, presentation, to market always were charter view will as we'll evening. their press in release you with we time and opportunistic.

can be industry cyclical before, and seaborne the bulk is say As you’ve heard us volatile. very to dry

September. and a TCE Despite BDI remained seasonal these led XXX the by X,XXX in XX,XXX in decreased volatility X,XXX, average by to in high Pangaea’s published fleet for at a approximately and X% average vessels year-over-year rates market in low Panamax our XXXX, for X% to XXXX same. the increased conditions, February the rates Although, of Whereas average remained Supramax XXXX. flat multi-year

the rates by rates market market an continuing for -- leading XX% also exceeded performance. average industry We published public XXXX, of our

was year for extremely us. XXXX an active

We Along provide increased fleet book busiest continued forward time vessel improving renewal to third despite push details our substantially and the able Those quarters, such sales impairments. more which on our in operate results, Gianni logistics. as strategic and port is fourth our age, strategic profitably efforts sale year. operational activity our strong Moreover, with of our our to losses priority and advanced typically fleet the shortly. core will we're initiatives

In May, with a our with new fleet Corporation, customer high of continue we demonstrate in niche shipping. our announced Baffinland contract year Iron high leadership ice class to XX Mines Arctic the our expansion

business. post-Panamax signed new deadweight at to this four also We contract build a Guangzhou bulk China XX,XXX to support ton Shipyard in dry vessels

of built and North our renewal ore from on shipment a than purchased the the enhance performed less from during port we valuable year, young beach miles some Additionally, temporary To vessels. X,XXX we test a the fleet Pole. Greenland, secondhand

Management Our of help our the us Capital with Hudson class ice with continues vessels. joint construction expand to these capabilities venture Structured

committed Further, sale/charterback year -- competitive for been transaction. the a financing ships had have committed have XX

position older year, our in selling aggressive Despite four we the fleet ships, of us when renew further took with end the renewal plan opportunities steps a to putting by arise. the building debt income our operating of and shareholders, substantial year-end. amortization, strong stay new at our purchase vessels, dividends above the cash $XX payment million cash to to allowed new deposits Towards of

operations the awarded Point now to shipment onshore reach stevedoring perform Mississippi a major we our customer there. and also cargo first is for a with which We're in Terminal, year-end. at Additionally, contract Brayton operation in received expanded River our our

which expand. difficult related our ready make We continue demonstrate movements, to us expertise in always handling to to cargo challenges

implementation XXXX began regulations fuel much of XXXX. about under uncertainty with new IMO the

with operational planning been The overstated. has has put scrubbers And over concerns in burnt And again. us and position fuel to gap fuel by of advanced non-availability very compliance compliant considerably. Our to decision market by our time seem without it time made have A and suggested new burnt early narrowed fuels as was the the ships in transition has ships with non-compliant on regulation our well, a to between problems. significant competitive XXXX. fuel compliant

that, I'd like to to With details. turn over to provide the additional call Gianni

Gianni Del Signore

everyone Thank in all you, Again, truly remains the for call. healthy time you hope and thank this to and us Ed, and join everyone on today's us. appreciate joining time safe we taking unprecedented

Before walking financials, upon strategy. expand our our to business like through I'd about earlier comments Ed's

the to like is not we'd be course, this Of market in.

downside, is and XXXX protect the quarter our did the past, the we in built fourth However, and to as as it we said model in the as navigated XXXX. during business into decline

fourth right to market quarter able vessel recorded a sales before good to we four collapsed. our of very were we during impairments, book and the While at the prices older sell related loss vessels

to Ed as years. our lower goal, our average XX have is noted, down we to Our renew and nine which age, from fleet years reduced

collapsed Endurance, Independence fell As improve lower our steeply March, on interest Bulk the interest and in debt capital, on Pride a capitalized we rate the cost facilities. Bulk fixing rates Bulk rates market and of environment to

allocation most lease extending ways contracts to we our opportunistically sheet purchase very right. Bulk in were enhance to sourcing remain with strategy and facility fleet XXXX, our acquiring feel In and customers. expensive our is standpoint, XXXX active projects the our will accelerated key option one strengthen In vessels balance facilities. finance addition, identifying of with January, preserve to tied continue Beothuk We the new renewal our vessel a added from opportunistically to when pay value off in capital revenue on our acquisitions, we and time And relationships. customer we'll

as dividend deferred payment, to decision in extremely uncertain revisit which Ed our as monitor next COVID-XX maintain strong our And these global we to will noted, we on quarterly we times, have pandemic. the a footing continue

Starting full with was carrying now generated driven million, turn in are clients revenue, an This a approximately for that, XXXX. of voyage voyage revenues our XX% cargo by With XX% from from to $XXX.X predominantly which increase I'll was financials. days. our increase year

in while to in market Our $XX,XXX. increased for per from approximately year day the average the $XX,XXX XXXX, TCE X% was rates XXXX $XX,XXX

We long-term driven approximately rates the over and outperform fleet. specialized overall and continue premium XXXX maintained our focus XX% an to cargo of average market COAs, by market for

our to from fleet which the days by by of XXXX charter decreased is a to in to declining revenue, X,XXX to was decrease charters are execution The strategy days decrease driven decrease This reduce and and chartering million. time market primarily X,XXX. rates, exposure rates by utilization in decreased vessels. of $XX.X on redelivering and which XX% to market due voyage Charter opportunities in our market tied charter-in to decrease the in

increase increased requiring XX% vessels a in $XXX compared charters million a in September, paid by increase ship Charter to with driven to in XXXX $XXX XXXX charter in reaching relatively the million days. in in XX% company XX% Further, a in XXXX, by was days. increase The certain was resulting voyage during average increase compared the $XXX.X Voyage to XXXX. charter expenses million coincided expenses to BDI an charter-in in from in increased third-party was owners as X% flat on paid. performance expenses market to the although expenses This multi-year of due charter additional $XXX.X voyage to to the high million.

recognition $X.XX three to on $XX.X in increase impairment in XXXX was This decrease to increased sale the to to expenses $X.XX $XX.X million $XX.X acquisition and book operating per of XXXX of Net of for Vessel due The is December -- vessels vessels. share losses per during year ended XXXX. or from million million the the sale by due book attributable losses income XX, Pangaea XX% to share. XXXX. compared or was $XX.X million and

loan flows. to period cash cash Restricted was used December $XXX,XXX, by versus commercial under to changes new lease financed of slightly company's million compared including balance million secondhand used operating which XXXX XX, in million a Net and December the investment reflect XXXX. during to activities facility. $XX.X $XX.X vessels in in was which million million Bulk and in financing $XX.X Spirit the were provided cash sheet XX, to as the totaled the finance $XX.X equivalents Net to XXXX. under purchase net and Bulk on These vessels arrangements, XXXX Friendship, million million of Moving grew compared Independence, activities compared building activities cash and during and XXXX. financed $X $XX.X cash Bulk same as investing $XX.X the were and the cash in the of

turn for remarks the portion our now to of Ed will call call. I to get that, back before With Ed? we Q&A over the any additional

Ed Coll

Thank you, Gianni.

for see facing presently us. uncertainty -- this their and Longer and well shareholders to we're positioned initiatives commitment Pangaea and presenting path and to from can further various forward for the you we're the coming our you well term we year, and took look is business clear results updating As forward partnership, continued in thank our We customers, positioned. partners quarters. we address

for I'll now the floor open questions.

Operator

Instructions]. [Operator

Fratt comes Noble first line Your Capital of from question Markets. of the Poe

Poe Fratt

you And seeing now sort of Good cargo Good you heard then book? the could or of it's understand help then the say to, market me sort any now? where was the right last talk could picked you're Gianni. XX% sort morning, volume whether week either Ed. if any pricing I I Or stands right the of up. that and seasonally and help a benchmark conditions. pretty expand like hoping us of in and stand you on sort I there would off note, morning, current you you too, on in book also you where it’s cargo year? understand about sort market your of started -- me change to comments point about or thought that could year we your of Ed, maybe Could is

Ed Coll

Okay.

That's So it right? was except that look Number of reflected, situation it's this operators, if size way. And demand world now are mills, corona you at. business add a we cape not I we're way that our because et you raw cetera, supply ways. put quite many seeing not the think, okay. I And ships. That's if and out of two have you a The one cape another we healthy, not business, right? steel then, in business. If material not looking thing the [hurt]. you’ve mean fundamentally you're it it are to disruption and pretty at one, it, there's in

on things it’s that So do fairly beyond that, the interesting has a the We of resilient. just the see been stopped corona of economies. this happening, ground lot whirlwind

And we're to okay, solid unfortunately, the because because And that we're to lot relationships a opportunities create so general see it's all fallout bases and good hope the to we for that are I of And contracts. think come of in it's end, project we next in months. fruition sorts have lot marketplace. us, going will in doing, the things a the from few some going and we of

But fortuitously this ships we I before in have able that We support up age our to we think mess happened. clients. in XXXX is contracts. ships client, this fundamentally, your just And have what our stage, were four end ordered reduced their those water. fleet And contracts and we to have the ships our looking on against at of not but sell you the

together. So you fits have all how everything to understand

For our backend clients. example,

toward $XX our of a cost ton. their think I production with project get will new down

of a premium top XX% that. they're and $XX -- their selling on China, a get So ton they quality of for in and at

that's The small over good operation. we cranes there. business we stevedoring We the into business. business, So invested And resilient. safe example. very for aluminum us, do actually with It’s a pretty that their Noranda, aluminum which think I a in took capital is

So, two an or weeks explosion I we happen, six we of will months, this will which we're situation, when to through my think whether demand. going get right, That's get get through, opinion. it's it that

pick people right we’re ships, to And older who ship, like and so sell. would sell where more up need one an taking would to now, we of we advantage of couple to a like ship,

fundamentally, cash. I think we So, our have

good a business, have continue money. We to operating make

certainly that in we're imagine competitors. across -- I So, our situation best can across the

Poe Fratt

as the by of some have the all at builds on ship new on slowdown? us China China? -- -- seems shipyards your as going the It about projects out concern of update progress of sort coming what's any and the and you far in can just on some like been have And impacted you're maybe the

Ed Coll

do they need you these going of Chinese, them. $XX,XXX my really talking did and we And they people. want problem, around, us? Europe equipment United on going you sink story they can all that Right? masks? they them now is tells the stimulate they that, But say, were about asked of all to do. we this with much you what treat the okay? China, we is a to And we're a be don't have us need in pretty it. on they We with And for okay? a help we the it things and with mornings back? kind did, guys doing shipyard, work, to give rigid back world Do kitchen you what's in said, to So of early it Can everything -- your of on. hope this. think help what's reasons, spend worth can into around going And in than and be and I can the China, to for flow they here, the our stimulating mix. can Well, the through States more in at gives Can And lot everything interesting lot obviously you I economy. we So to sent get and economy their certainly we now back But also -- in But everyone us? about how China, do about you least turned there Asia. you seems they're are coming that course, the about

it. get will And so through we

So there's buildings. new no problem out there the for

You be up there pent can that see will demand.

what by want things They're but that is day more are current people the moving. see more to do. there's bulks minor being the With every restrained and we things situation,

going see business. people no change things. we're not just ocean short-term We better. I that. market And before That's take change. -- will have project of do really That's going think People worse that. except to and it for get well not to the in it's need And okay. things our of sense that's -- in advantage -- to move to but to and gets it by our And so positioned

Poe Fratt

you over higher quarter? your was some looking to the it give evolved allows and would -- it's you half charter-in on Ed you the of you average with mentioned year. color above activities charter-in us your -- you of just And your -- activity. maybe the year Can flex second model into over the the course and how Can second

Ed Coll

you I try eliminate short our know, and we this based as right, what around idea. backhaul think, period, Well, and everything do to optionality and backlog with business risk is cargoes, to our is charter-in so

now probably number longer program those go time, term in in lot. the the down near and of then back. -- the when the further, the money we're term on to to looking that's a our will think the I of ships, number come do, At think and same So be little probably not charters out bit It take the doesn't charter right a thing opportunities I side. at take

in providers, It's asset finding tonnage dog it's and are say a think not people. type people, the commercial guys players. are I scenario, that order two find -- they're let’s really and to stressed that

I think We'll and the take believe we if the take probably hunker the market I it. the find But that carefully support keeping we is going short-term down. term, just in to we opportunities to cash in won't that will on there. the near the don't think look ships of risk

Poe Fratt

how of a And many can just vessels ballpark you give or an me right you've number? now of idea chartered-in sort

Ed Coll

index -- can say long term on And as with that have chartered changes okay the -- going. those because based. index you have we're that's a give bit. it And every Yes, let's because don't we And as I -- they're or continually about think coming payments And take. on long-term we we ships. are quite day we longer outperform and XX know it's you know commitments us

own some need are you difficult ships a cargoes -- we of it's ice to but trade. ice to our and be that. not but that not do ships we and -- actually as know, have we of we we clients, ships the specific to Half service ships very some commodities. able ships lot that ships We focus the to a own on own work places. -- are a are other were the And fleet in So difficult and

Not own long our really, don't this model. And smart it So in I've of whacked. historically years for us over. we certain requires before so it. believe you think and percentage believe get the a over asset-light because only happen ships. can so don't you we in XX that's be We The total business seen to model, it in

having in a controlled So, our thumb. -- balance it's think are we that have where a XX%, I ships good can of balanced rule charter, and owned of XX% that's a

Poe Fratt

fourth you wouldn't quarter questions if Gianni did quarter Was the up close? or the the hasn't follow couple when sale -- -- And yet? in on just -- the looks Patriot’s it it closed mind, or did Patriot a of XXXX first

Gianni Del Signore

Yes, for December so was on in February. closed The she of sale our held balance XXst sale sheet. as

Poe Fratt

you then the also And Okay. sold Barents?

Gianni Del Signore

correct. first the our within quarter. Yes, Handy was That that sold was also one,

Poe Fratt

think in or? I Yes, too February

Gianni Del Signore

It ... little bit was early a quarter earlier but the first was in it

Poe Fratt

And on then fixed me you -- Pride I flavor Can give Independence. the where on give Beothuk and rates you the of you some said a the the book, fixed? you and think us

Gianni Del Signore

Sure.

the two Beothuk. purchase option interest and there on the on So facilities exercised We are Bulk of rates things. we early our fixed one

about financed we ago a you the So sale sold Beothuk leaseback. arrangement, under two think her lease recall, finance I years was Bulk as

our this The off pay lease and to exercised we January. May accelerated to that the first in -- essentially of But us available purchase was in or option option year.

she -- facilities one that highest bearing highest interest that had. did the was our one of we we unfortunately So and of interest

interest that on could of reduce facility we our thought and we get that out one. So cost then

we broken we other one And was Pride, then the three did up with facility Bulk It's Bulk across the with NIBC vessels, Independence, had Endurance. the the the that and Bank. Bulk

the tranches the in we course of tranches. So Early March. there's those March, three locked fixed three we over interest different across rates that

Poe Fratt

plus LIBOR think X.XX with essentially And maybe…? I or

Gianni Del Signore

the the were for at It of the eighth first LIBOR increases quarter to through quarters plus loan. duration eight plus LIBOR of now, X.X the facility. after they Right floating the X.X

portion duration So of low we LIBOR facility for the fixed the the in Xs now. the

Poe Fratt

the okay. For duration

Gianni Del Signore

Yes.

Poe Fratt

buyout? much how the finance lease then, And was

Gianni Del Signore

It was X.X million. a

Poe Fratt

this shift the on through a that if then that you quarter half buyback, the -- up you sort get over when pent what the then of not of it walk second permanent is? dividend you implementation dividend just look the declare the dividend? the the from be I per would And or that, or at the we demand the quarter declare and to inclined hold stock declaring and guess the sort of us materialize of more again? do it you’re thinking Is you'd each reviewing Can see something -- it’s year what to quarter

Ed Coll

I and right? right? And that going use look -- No, bit. our we it that what deal borrow cash, the almost there. sure there's that's opportunities. so it's it's want a stay free not moment. there I We're problems to want uncertainty think But That's move, out means out with I a for when cash hoarding going much said, you're we're it. And situation for make And because number and is, in out we me will we better a to very to at little to to to cloudy with. have have a mean, it's one. there's money, for that we defensive off as Gianni that way our better think hoard probably that's

back know At thing buy counterintuitive. ships if buy the that, sold have that's being. and immediate because We that prices. rather replace we have don't it's cash time right any We really probably a couple the of to at we back will keep But to cheaper time, would same the we for the do that the do. we plans shares to

we'll what the some timing back be with But consider was that'll reinstating we it. to fortuitous our there did. But stabilization, coming quarter-by-quarter. there's dividend, yes, So if sure,

Poe Fratt

think you at sort it vessels could values do asset you Is XX%? us. magnitude of And point for dropped? can interesting in an it's much this reacquire of How you me much of order have XX%, idea give lower time? how the And might

Ed Coll

what a Okay. we a the percentage far. we completely buy at ship, differently. we so thinking would something And more -- like which ship, probably generally to just Well, about buying Japanese to intuitively, I ship. say means ship, buy for want it we But buy look don't and us want right when it's modern good just to is. buy want a built a XX% we

I we're goes of to just church And years As from a a we think it. down Sunday. buy up. we like that ship, buying probably XX going used like old who from it's want mentioned, and down advantage something end That's to from you X So where on car piece to the years, XXXX-XXXX lady would good that take and range in I of focus right? to

So, need it’s out of ships. a buying and we're not like going a fleet, we just couple

junk, but we're buy So inspect ships regularly, something we buy in our fall going when of which built not going not into lot to doing. trouble got -- lap, will we're Chinese a people and to

Operator

like this At questions. there remarks. to to now concluding for turn or management further call are any additional time, the I’d no

Ed Coll

and you and safe stay family. your joining for Okay, for morning this well, us thank everyone you

Operator

Thank conference you. today's call. conclude That does

You have a lines wonderful may now and disconnect your day.

Pangaea Logistics Solutions (PANL) 24 Mar 202019 Q4 Earnings call transcript