Earnings call transcript Q4 2022

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Operator

Good morning. My name is Shelby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Pangaea Logistics Solutions Fourth Quarter and Full Year 2022 Earnings Teleconference. Today's call is being recorded and will be available for replay beginning at 11:00 o'clock a.m. Eastern Standard Time. accessed XXX-XXX-XXXX be international. or can recording by domestic dialing XXX-XXX-XXXX The Instructions] [Operator

pleasure It Vallum Ryan Noel is Advisors. to the now my turn floor over to with

Noel Ryan

Thank Chief Leading Petersen. the Logistics with me COO, the full you, Mads CEO, 'XX Gianni call welcome Mark Del is quarter and Filanowski; year call. fourth Officer, and Pangaea conference results today operator. And Financial Solutions' to Signore;

business filed in the to as and significantly required update line discussion forward-looking for financial Actual reports remarks, conclusion by about obligation contains statements. Today's the various forward-looking prepared differ projected forward-looking no results including described the questions. At to from undertake due periodic future those SEC. uncertainties, the our today's of with statements statements may open law, will Except and our we we in expectations. risks risks our

would And Mark. to with turn that, over I the call like to

Mark Filanowski

those After we call And the joining XXXX. Thank on welcome Last for results ended issued market you, the to in XX December the three XX, to Noel. develop markets. months continued specialized while us and supply today. closed logistics webcast with and dry logistics our leading company niche of we year, scale, and transportation providing and chain shipping, commodity customers bulk and offerings services a yesterday,

in of months vertically seen best full first the first volatility. Our market the our shipping of XXXX, and being years. premium with integrated on strong a pronounced some the of operating were year durability rate period profitability model display of record cash flow six TCE we've the put half in logistics rates during

our vessels purchase added third our one environment fleet. XXXX, in four from second strong joint NBHC venture utilizing Ice-Class the the in together one new to by months purchased fully effectively our two five fleet, XX this During interest more our partners and our of late we prior period, on vessels the with demand vessels, in build including of which hand and capitalized rate

arbitrage in fourth During the quarter, market. rate our falling a drove positive strategy chartered-in

beginning of market latter to chartered-in half market deteriorated in our the of fleet - transportation during While and conditions long-term in flexible excess positioned indices. us perform contracts the well XXXX,

XX.X% TCE declined but exceeded benchmark the by the a in in fourth earn quarter, year-over-year our TCE basis rate on XX% the period. average average

is quarter First day. days our date, for ship $XX,XXX XXXX booked X,XXX to TCE per

fourth to rate adjusted basis solutions, premium leverages chain XXX which integrated the specialty carriage the expansion contributed model, of cargo EBITDA year-end Our points the and year prior compared onshore quarter to when in the period. margin benefits realized supply

we XXXX, investments in and free In generated and balanced consistent self-funded with approach organic a growth nearly us $XXX cash a pursue together robust toward million dividend program. positioning flow, to inorganic

our measured to expanding logistics and In support renewal $XX will particularly capital immediately to include it opportunities, basis of fleet priorities our and cash million expansion, shareholders. quarterly relates XXXX, platform, than more annualized which represents on debt complementary, continued reduction dividend, an our onshore in as dividends accretive allocation further

China and in Looking economic for west provide support reopening XXXX, should stable demand. a bulk incremental the ahead dry of in anticipate remainder that activity we to post-pandemic the global

restrict and On efficient for given of that constrained further fleets of is IMO future, bulk the will orders. emissions the global recent foreseeable regulations new-build building combined shipping new impact reduction side, and supply the low less will dry impact new activity capacity mandated introduction older,

regulations. with sale is we sell $X.X consistent million. XXXX, January entered global our Bulk vessel, to a maintaining our agreement In amid a Supramax modern tightening of efficient This strategy into and XXXX Newport, fleet for an emissions

the fleet requirements. to to TCE purpose support and operations commercial intend our maximizing we client ahead, continuing of Looking rate, with opportunistically manage while

see We for progress. partners and to horizon, our you closing, want profitable employees, on on personally and updates we all growth thank forward providing In continued of regular look support. for to opportunities our many I their the shareholders

over to hand I'll that, Gianni. With it

Gianni Del Signore

welcome Thank And all those you, Mark. of today. to joining us

business emphasize fourth financial leverage we model our as our Our flexibility our bulk weakening continue maximize dry deliver chartered-in operating returns were market. of made quarter able to results through to solid strategy the and a that

to for in approximately quarter by in market cargo to Panamax day, Fourth is business. short-term supported average period, our TCE more were the rates vessels our a COAs $XX,XXX premium and published the of per than which XX% opportunistically and ability lock rates long-term Supramax

a $XX.X EBITDA the off capping Adjusted year of for XXXX Pangaea. for was full record million, million, quarter EBITDA $XXX with adjusted

on year-over-year. points basis fourth adjusted XXX the quarter in approximately even expanded as margins a year-over-year basis declined Our EBITDA

million in in higher total decline partially quarter. in a in shipping decrease a in market lower fourth was year-over-year This quarter XX% overall adjusted to revenue revenue chartered-in expenses, the decline XX% total EBITDA fourth to was and due lower year-over-year $XX.X offset The to $XX.X days. the declined rates million decline by by attributable primarily which

the company's trip over charters in versus XX%, of fourth expenses operating by as approximately declined favored increased days Chartered-in XX%. the Vessel charters 'XX quarter period XXXX.

vessel approximately an a about of XX%, increase year, a management per-day mainly due $X,XXX crew management expenses. full operating travel excluding expenses and increased day, the on for expenses to basis, However, fees crew was

contracts selectively and the we and to in agreements market cargo the discussed bookings. forward on As past, our bunker long-term our utilized hedge forward to swaps we've exposure freight

on cash flows, to locks basis, while the lead future approach of occur and in physical position of results the execution reported settlement fluctuations this mark-to-market While will date. or future unrealized a gains can at a period-to-period the our in losses

of adjustments approximately and $XXX,XXX. agreements respectively bunker forward reflects and freight As rate interest such, of million derivatives swaps on to and loss during on the an unrealized reported income mark-to-market fourth quarter, $X.X relating $XXX,XXX gains our net unrealized

was the reported our diluted the line XXXX. million total, quarter for In of Pangaea to net income share GAAP $X.XX or in per with attributable fourth fourth $XX.X quarter

of the XX% XXXX. statement. quarter million flow fourth Moving $XX.X cash to operations the cash increased Total to on from year-over-year in

including total result, As and obligations in the finance million million. cash of $XXX.X $XXX.X had a equivalents company lease cash debt, and

debt debt. quarter, XX% the impact our X.XX%. Of LIBOR is higher was X.X%. our times. results is and of of relatively of cap all-in floating rate the LIBOR month fixed rate XXXX, X.XX X% the muted interest total our trailing rates fourth in adjusted an rate at end X.XX% financial capped the leases, and plus rate of of quarter debt the XX% and of due At long-term XX to EBITDA at at fixed was to During is ratio net

integrated chartered-in fleet and strategy, of model expansion the during above-market fourth In by capital and allocation. supported conclusion, our vertically execution our continued delivered shipping logistics strong growth quarter, disciplined

never stronger, and to us investments strategic continuing and been positioning operations, cash to while stable our debt in vessels drive a new dividend. XXXX, has pay Entering position quarterly logistics liquidity reduce

toward shareholders. opportunities, we optimize return new to capital on As we value seek our will creation capital invested, consistent for to long-term further to growth aim commitment our with deploy our

for we the line that, open will now With questions.

Operator

you. first we'll take [Operator Thank Instructions] question And Burke Liam from our Riley. with B.

Liam Burke

you. Gianni. morning, Good Thank Good Mark. morning,

Mark Filanowski

Morning, hear you. Liam. to Good from

Liam Burke

the capacity steaming? fleet you. mandate it's early slow in you emissions Thank further mentioned are the related and year, on seeing carbon terms steaming. any in to global but you of tightening slow IMO Mark, the I know

Mark Filanowski

see Liam. it yet, don't We

out everyone. I exactly think people affect the how are going trying figure to still to CII regulations are

end end in how be you the up to affect possible by careful plan make got with as year. don't a and on voyages You've efficiently operate year to sure you try that's problem something of your your that going as at early doing you to to the ships the

already going Petersen me. really leading the of get looking what He people to voyages to a the regulations. the we're directly. these do Pangaea sure ratings best in to on of of our has on regulations. make is work with year to here have exactly Maybe trying to We're charts make their here are CII toward is at sense comment So end that the trying the side impact way terms ships. the ships and our through he these we Mads on of

Mads Petersen

But It stacking helpful where the with for up but of the and Liam. yet. sort something of shadow not I was impact regulation, We're against many operational monitoring tracking others. at No. hope how new a has Mark. thanks, question Pangaea. is an moment are complying we that actually are we it, this it's Hi,

Liam Burke

it. Got Okay.

out sheet you CapEx should you the buy Your at capital looking be except allocation in balance if How relatively cash more is flow strong, But XXXX? your in and assets. go is best are low, shape ever.

Gianni Del Signore

Liam. Hey, Gianni. It's

I think consistent. pretty we're

can we own chartered always wouldn't to think I can a be never in the fleet are be Our opportunistic remains that, said, at I being And We perhaps we in strategy our the a same. That been us. look look said, many think priorities for for at. years. past, you fleet if priorities, and we our our we like different position. better been things at look in It's - we've and position

Newport. And of first 'XX. supplement Bulk may We a renew. sort million the QX million or to two in the our we for continue for continue and look one We're to look to then $XX we to Debt fleet additional pay selling to some this opportunities service, debt. down of paying at meaningful $X year We're assets have quarter XXXX. balloon

in to balloon. that million, be $XX about a So we It's balloon in do we want position flexibility to have XXXX. approach want as million a we to $XX what

for as consistent it and well. to our dividend said before, be message to is we then everyone And we goes try that our

where position for can position want good So that be we good cycle the a long in dividend continue in we so in opportunistic. flexibility to pay possible. a have and it's as to be to that through be can as But it's we to we're

Liam Burke

you, Thank Great. Mark. Thank Thank you, you. Gianni. Mads.

Operator

from take [Operator our We'll Instructions] AGP. Fratt Poe next with question

Poe Fratt

doubled. I about Good the it, for but amount - sheet. doubled still on have of just to you has morning. year balance over you the debt. you're It's - Granted, - of carrying the than first. can you're of almost you sheet just Can you cash mean a talk reasonable about alluded or last more you sort on balance - Gianni, cash $X.XX talk you

deeper you're a another talk you And coming you so Can $X.X on just cash in. million strategy? roughly top net selling little then get your of the you're Newport management into more that about that,

does So sense make cash? that it much carry to

Gianni Del Signore

- at well. a think that It's great as internally the level Poe. certainly we Thanks, looking Board I and and So question, at are

reconciliation cash. X held which noting worth thing, $XXX that or a you would first of the to our and I million in a ventures Note cash of I is XX-K, is consolidated. it's breakdown And that think guess, in others joint some our are of The that I is point

our have partners a in we So that cash. the that say utilization of have also

deploy full But million. in it. you There's cash - let's you. X, attributable to have whole, to different there's about say, banks. Note looking and now agree we just look yield It's $XX at if amount Pangaea to, actual at I So is for access with consolidated the we're of opportunities versus

look But where in us. to comments have being Liam, to - as opportunistic think back different I important a my to to we to is flexibility as position to I at be for able have be possible, projects, think, the

And we're cash returning trying to we to - are shareholders.

And dividend. XXXX. that do in at opportunities as then things a well. over incrementally We've are forms certainly if it paying we other are looking see return We increased or to we other

Poe Fratt

And then you control the joint though. venture

you ownership thirds two know, have interest. You

refinanced You joint lot the of venture a debt.

move why So to cash corporate? not over that

Gianni Del Signore

Yes, we did.

continue ventures, We that, that. we We million our absolutely. of joint will -- do a we're we'll $XX doing continue and one are - dividend paid of out to

our Board partners that with think I revisit - frequently the Pangaea we at periodically the we level, So well. it revisit as and

that's on forward. sit view to think I want meaningful it our it use want we able We are expect generating how it. that's to value. don't deploy to we'll And ways we be if how business will are that and that in to cash to don't - we going So and cash, be the view

Poe Fratt

Can And the industry. thought days, the analysis whether where concerns? are you've how run then just you some XX things potentially who your - might of in comment last the see you on where risk on happening that would cash is a have over some banking and

Gianni Del Signore

receiving mindful our your cash not absolutely panic but reviewed the across It's banks. on you're we're where global, the certainly it that. all world. very you making We're We're right. - We're a always right? we're We've of U.S.-focused and we have market some sends just - banking payments. payments Yes, system, to

and gain cash, of Europe. we've banks of in banks almost in a So have U.S. the generally Western and banks, would all we we and what in our been lot larger larger it, the big the

So yeah, position feel cash We are we're a looking very we is. our currently good closely. where in

as So comfortable place what's who know knows? try feel knows ahead, it we'll as I to who but we possible. in that keep a

Poe Fratt

you about, one, really of talk two, chartered-in Mads, you And course scaled give we - on the of is charted-in fourth idea the looks for where right Great. And year? the if of the back how looking rest rest now? the quarter. And the how then you the fleet an chartered-in of are Can you could us for the over the then Ice-Class year? fleet market fleet the how

on or you're to layer two just what renewal non-Ice-Class? where that, the might Ice-Class one then top And fleet see at just to it looking program? assets? continue Is of you the Sort of

Mads Petersen

Happy that. to do

think I your at the there the point with fleet to assets, for in assets add to the looking own of - last starting to terms fleet. we're

add to we is to our size fleet. and moment in on have the focus the is fleet, sort focus fleet we to the not that's why that Our We're why – Ultramax. That Supramax to looking that's at our know, of and any aircraft really. conventional the probably you look

In chartered-in are in our fluctuate our mean, that of the terms fleet, will on be. the ultimately, they accordance how view we I busy market, think the market will number course, with and of customers, where

last market absolutely go as to operate. did year. fix is is, ship the That's of throughout quarter redeliver can go year, part - we when dropping you're and right? number and of the way we That fleet. the is cheaper, like We last So It then that business can challenging the the the half latter designed this we re-price fleet the it right. last down

want will up than in just fleet, the peer on whatever extract time, going yeah, on actually the bit six market. having things kept over of on period the most have the decision the We be shifts [ph] some the have So of times We short as done into that fleet depending months to time we imagine market QX. didn't of trending current lower. that to means to will execute that market value part as what out trips the to But is rather improving that at That the next, load will right? maybe now, I proved right this in sort a are happens grow to three before.

signs we We need period line it expand better are the of a this market. seeing designed that. and business the with value to always We're early of dynamic and part the that have in to we market, trying that to fixed is short don't in in ships of the and number extract employ be contract

on the of of then and front, North the the have ships And engaged business Lorenzo. some been the doing predominantly Ice-Class have moment, in the sort Atlantic at San out been market we

done the last that taken to Russia or cargoes bus from following origin. was not haven't Baltic We already our any really with engage in Russian trade decision anything in in year the

fleet. fleet So normally be compared modern can It an of business. is that a the conventional But of would impact that fleet, this do did to earnings time where it's year. driver it efficient

we are will where And for Baffinland coming that's it sand course, in summer, be up of contract business. - over still that all still right? have our So - ships the is quarter, and engaged the we

that your yeah, answer So questions? does

Poe Fratt

you Absolutely. Mark, you Thank Great not color. leave And out. to

Mark Filanowski

you. Thank

Poe Fratt

just as you've logistics look you logistics hasn't far you When the the about couple accomplish - what if hit yet. longer. talking to Can want for there? you been radar materiality expanding screen you quarters, talk you business about can at strategically side? what on a just not of But strategically talk do want It to the as about

return able your then you talk include? us just might to on kind And about of targets you idea if what deploy? might also capital of capital how then an of much And sort give be could

Mark Filanowski

Okay.

it a activity shipping deliver on to shipping, really, helps doing to we expand Poe, of during us opportunity cargo our activity the or end our on on miner that ships, doing, form. to and little is gives return is the low get more the business. we're the get So with of our ships to the for But a we then even First can a developing cargo on more relationship right? customers might get by put all, producer closer the be voyage, cargo other in a strategy to also

overall, our increase. margins So

increases. Our throughput

gives might other miner movements Our revenue it that be increases us and making. opportunities for other

On or - user Sabine in we the the say, get cargo, and our where that with another end our another discharge on we terminal, point. person's other ship side, ship that the company we closer with arrived take we to arrived We ship, in comes and cargo.

our ship we to our and thing doing work. for cargo cargo if the into Gulf, where the do we it U.S. same extra more the they've they additional maybe Sabine, to coming on got get So managed margin can ship can ship get into terminal

really these So the by business strategy end. other to shipping that's things on expand the doing each

into going other having other were summer or to came the developed Sabine with and third-party did Sabine them very when operation Now gives that either area, relationships gives helped some that ships. Texas Houston, are the crowded, do having into last in commodities companies, to we but to opportunities opportunity, business buyers us with suppliers that ongoing. and we - decongested, get customers for in business we Houston those was Back of trying they that instead

just is point really beginning of to point cargo whole it's from what expansion of end So touch after, we're the Poe.

with in spend shippers where the do said, to them ways could trying different U.S. customers terms the expand - suppliers, get In to of we and cargoes going more Maybe customers with in on ships. producers, operate our that. that Coast, expand, terminal and right with trying lot to We're to business active. target down the can get buying on or in current River of I hold not up like another it real are of our customers our a we our to capital, now Gulf money Mississippi existing estate but do

trying by extra at In we cargo and in the higher an of if overall return. itself. packaged we're But freight mid-teens, just getting today projects services, us expand gives to ROE, guess, terms took the of business that is terms whole really, be in returns what I [ph] additional of we're opportunity on by carriage again, looking on do services, would that stevedoring altogether

individual now. So again, at target probably looking strategy, the our right mid-teens is that's projects,

Poe Fratt

lower the characterized risk the to the be the in going is is is consistency, when Okay. And it creates heard more - the lot there I peak is side little that consistency adjusted, fleet consistent it, then, on are in little Mark, lower you more volatility than think would business and I a logistics there more a you maybe lower, overall but cycles, returns so but business? a risk

Mark Filanowski

Yes.

For project trying that a to into port instance, Coast. to a relationship new Gulf cargo develop take looking at a in we're Poe, we're the with now right

a on project into of the - So based port. it's with for carriage contract comes commodity really that

years doing consistency the goods port, the So X the then with if discharge stevedoring commodity a to low the that X together port on stevedoring. carry put this on for year adds stevedoring business, this can years contract the contract, because get we business. or the or for we're or We X the whole along

consistent. why market so not we dependent we're it's much. So on fluctuations That's more think

Mads Petersen

other actually right? the something one broad to that not depend just create Poe. that operate maximum totally And milestone, independent is offering right? for from each like The other, each comment, on looking We're

from drives relationships that especially Stevedoring in will powerful coming buying shipping the and not that, meaningful alone, bulk the more right? on ships and find, of is you carrier, combination activity higher market. much any generate instance, But without that returns margin sort to derived that comparable really a is own for our

operate higher and it's a Ice-Class not service It's more same just and to to what way of a It's moving is offering happens B the than of different create sort before. a It's now, customer not more know, the the of a our - A it value different from approach a about just yourself. to getting of end result of really that stuff same to from instance. business, thinking for comprehensive not you different niche for and way idea, to

Poe Fratt

Thank Great. Those really you. comments are helpful.

Operator

that It the closing additional you. program at Thank this or I remarks. no appears we further time. Filanowski Mark for questions turn any will to back have over

Mark Filanowski

will thank Once to you again, Should you. our please follow This today. any questions, investors@pangaeals.com, with free have contact our up a you our for us and concludes member joining feel call. call at of team

now You may disconnect.

Operator

for concludes your today's That Thank you participation. teleconference.

may You disconnect. now

Pangaea Logistics Solutions (PANL) 16 Mar 232022 Q4 Earnings call transcript