Earnings call transcript Q1 2023

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Operator

Good morning. My name is Raza, and I will be your conference operator today. At this time, I would like to welcome everyone to the Pangaea Logistics First Quarter 2023 Earnings Teleconference. Today's call is being recorded and will be available for replay beginning at 11:00 a.m. Eastern Standard Time. accessed XXX-XXX-XXXX be XXX-XXX-XXXX. can recording by or dialing The [Operator Instructions].

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

Noel Ryan

you, Del me today Solutions CEO, Pangaea Mark Conference to Financial and COO, is Leading Quarter Officer, Mads Chief Gianni Call. with XXXX Results and Thank Logistics call the Filanowski; operator, Signore; welcome First the Petersen.

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

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

Mark Filanowski

you, Thank today. joining on release webcast the welcome and a results. issued detailing call market we those Noel, and yesterday, quarter first our the us After to closed

a the resulting than quarter benchmark period approximately basis, profitability. rate higher bulk was delivered XX% market nearly broader an dry for consecutive a Pangaea on that global slower rates declined where average industry XX% market in TCE shipping another our indices, During seasonally of year-over-year

Our XX, the TCE same in X XXXX, earned period of the was per March $XX,XXX for day per compared ended average months day for $XX,XXX to an XXXX.

us than specialized to Our rates better cargo-focused a helped perform environment. long-term COAs, slow fleet strategy and in index market

dry companies. the again at published Just the report we public top its of of historical list yesterday, X-year are on and outperformance, performance Vesselindex bulk

of East, in market seasonal global conditions January combined demand, in activity rates materially February, with Asia and balanced, combination extended February. in increasing improved the the contributed challenging to market bottoming tightness softness, in more a as capacity. Seasonal and market shipping recovered giving Since became holiday schedules demand in

a result reset in Despite weak not the during period. of COVID capacity congestion cargo first the global We've lifting vessel market demand. quarter seasonably was are of The concerns, seen some a China. deceleration of as rates material recessionary restrictions with easing in in expanded any seeing we

We volume global rate our the positioning favorable capitalize dynamics growth bulk coming are dry on business on the and in years. over expected strategically focused to

During we has $XX,XXX from in April, foreseeable from more market per the this expect strong will averaged remains constrained Meanwhile, which day, with in than lead remained fleet asset segment up vessel rates in February. X $X,XXX years, per as to highly future. values for ranging times X day the the Ultramax high. market tonnage eco keep for growth remain low Notably, demand supply

growth the with inorganic free nearly cash months, that us and and we've investing return to capital in generated and while strategy. our net high-return in million organic XX $XXX shipping integrated reduce leverage last shareholders positioning flow, to align logistics During opportunities

XXXX, In the acquisition ton is requirements representing renamed efficient April, more vessel secondhand a highlighting owned well ninth the in basis. our is Built continued delivered we dry to Pangaea fleet, our to in cash. this be acquisition of fleet. Prudence our equipped focus operating an newer, owning vessel since XXth support in and on Bulk on-demand client The strategic XXXX, on XX,XXX June deadweight expected market Bulk for completed be negotiations million for vessel to to Prudence XXXX, in $XX.X vessel the bulk

distribution growing while Southeastern dry this all-cash the adding an transaction. in terminals commerce bulk include within of from Baltimore, marine agreement terminal capabilities Port port we will Maryland network and In Everglades, United in we our the Beach expand Port and in acquisition, entered North With Port of to and Port into terminal to a American Host Florida in States acquire operations May, Mid-Atlantic definitive Lauderdale centers. Palm

with together leverages our requirements extend vessel. strategy cargo-central of shipping our service logistics dry bulk oceangoing beyond customers, competency relationship Our our the us established to allowing within

As remains consistent return a strategy. of capital committed to before, Pangaea

X a annually, as total further quarterly share opportunity. of by our per last a payout $XX we've to representing During us the which cash years, increased compelling positions dividend more million quarter, XXX% yield-centric per than $X.XX

Looking ahead, strategic reward closer On end-to-end profitable commercial that anticipate solution to expansion generate shareholders customer invest we flow drives on while strong moving to debt to level, supply managing an we reduce to and chain continue us this positioning growth. in to long-term Pangaea our year cash and further will focus continue expansion. margin our our outstanding a

that offering. As before, complement we remain an of integrated assets our tuck-in solutions acquirer opportunistic

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

Gianni Del Signore

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

the financial quarter to market. as first through we deliver and seasonal maximize Our our amid weak model strategy bulk chartering business leverage durability results operating able returns emphasize our continue dry our of solid a to were

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

in XX.X% revenue execution and first versus levels to due market strategy. declined quarter, a in of XX% environments and rates above XX% EBITDA successful to our similar XX% year-over-year the XXXX. amid the business are Nonetheless, of in decline are our attributable quarter a the Our market shipping decrease margins lower year-over-year adjusted EBITDA approximately adjusted total by first achieved up days in total

year-over-year, charter in chartered-in which, served seasonal in period, lower and XXXX. able an costs, which increases flex rates, expenses with our over now days operating market days we our to by stabilize a XX% coupled in reduce travel by year-over-year. crude seen have weak Vessel During owned expense begun by were to increase down hire to X.X% driven increased

operating expenses a from $X,XXX on of down year management XXXX. basis day average fees, full technical vessel $X,XXX, the for Excluding were per of an

diluted of or in income In total, Pangaea million year. $XX.X attributable share per diluted net first to first the was $X.XX $X.X per quarter our or for to compared quarter reported GAAP the $X.XX share million last

our of $XX.X well adjustments, million income to the non-GAAP as diluted net $X.X year. during per quarter attributable derivative decrease a million of per reported versus other $X.XX quarter of as or Pangaea the first $X.XX or share, diluted impact share last was adjusted the Excluding instruments

Moving a flows. conversion $XX cash strong on to of million by our adjusted $XX.X percentage as from operations but decreased maintained year-over-year million Total the cash to EBITDA.

is of and As debt is the all-in of long-term total floating X% cash X.X%. Out a at result, company rate financial of finance million $XXX lease at our of leases, is $XXX.X and and X%; obligations equivalents million. X.XX%; capped LIBOR rate plus an in had including total debt, LIBOR at XX% XX% fixed and approximately

relatively what over at expect of due to impact quarter. the our the higher rate and To line current XX-month largely as EBITDA results million with fixed interest the income. cap would interest-yielding rate interest first to debt the benefits XXXX, remain adjusted interest of rates At debt first higher, net remain the was muted During was blended as in our to end realized levels deposits interest in degree of or that in quarter ratio trailing was during generated we $X well quarter, the which of from our X.Xx. the rate rates

execution softest integrated and capital logistics continued performance expansion, strategy, refreshment market In of strong and fleet shipping model supported our the conclusion, allocation. by vertically since during chartering above-market and the pandemic, our delivered disciplined

business liquidity and are in utilize cash our reduce to while unique position acquisitions, to recent our to by evidenced a stable dividend. strategically opportunistically invest our continuing strong quarterly continuing pay model, we As debt

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

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

Operator

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

Liam Burke

production up quarter. does inventories if Mark, China least work we're is set you for iron balance the nicely of trade up first year-over-year at for for continuing steel to -- the through down that your pretty the first ore How the see year?

Mark Filanowski

Liam. Yes,

of we ships sort not the is market. like of indicator But say, an in and trade always all directly out activity and China. rise China the fall really of think in We're for China. lot tide for us a involved in with I

iron months, next from Arctic Europe. in months, Island the mostly Our iron where it's few trade move concentrated the in we've a the ore Baffin from to to ore is in Island, contract got XX-year Baffin summer

during spoken they period So are fully those October. from through that August for -- ships

mostly real activity And to ore any ships going iron other our on will affect China so water. the

that It in trades the will eventually we and soak see, that into Panamax flows down generally more up capacity Supramax trades. the

steel China So will more in there. be activity out on for everybody good

Liam Burke

handle you you to know a strategy how Great. assets do see that to out But of announced may vessel? want on you there the your on And just I you recent what purchase fleet. a sort similar you flex have other

Mark Filanowski

ship value with we're that for our opportunistic will Liam. to exactly we're regulations here, in perform probably records want, We're will always so within trades that the well trying -- But X looking ships, right emissions one we We've all high, find at think the and the -- looking be existing emissions all now. at we're -- we trades. got

the to do gradually Yes. and expand we fleet. ourselves So see continuing renew

Operator

Poe Our next Alliance from comes Global question Fratt with Partners.

Charles Fratt

If ones. the go the forward changed? think rate the of or booked I a of call environment X,XXX -- the last low business business at first the at X,XXX X,XXX rates year, a in for first over us point at inflection I you coverage and of Or couple just of couple Just to at days will over that weeks? this quarter you're the 'XX, like the at it. changed Has a year. quick visibility happen point of XX,XXX, willing all? think quarter look had of in You lot look Is that next of waiting the less days has it function

Mads Petersen

not question. of is Poe, on right? a were It shorter-term back markets April. There Mads in here. cover like sort that Thanks when take play, mentioning. what of the sort the definitely willing were We is you're trading are they for to

a ships, but course, sort of do as contract fix book, of we come that's to own one then these sort employment We time, did. don't log the sub point, that sort charter of they in we any right? At not up more short-term at and feel where exactly our that really of, fine, never had that, of it's at our will than levels

of So that is definitely yes. part it,

Charles Fratt

thereafter. Okay. Can the you Traditionally, completed then or financing the then financing cash talk you Bulk approaching plans about just for is could Great. you're sort bulk acquisition shortly the the cruises. your you of for before either talk finance how Prudence? And paid about and if

Gianni Del Signore

thanks question. Gianni the for Yes, here. Poe,

a the at optionality. fleet it little us to have the a good current our way bit more is vessel in it's to And looking her fleet. gives think I to we're debt-free add

year. different potentially to coming finance. available us we're vessel, And at have we later target to or we early up And One, next vessel some our in next we then her balloons if looking ways. two have this

we help us, approach balloons may use those to as -- balloons. or this those extend So those vessel refinance

deploy for fleet. I her we're can now, to can issue a for ahead, this we content. and think in the vessel. that to to can on with as we'll But but think We no we where there's hand pressing do debt our optionality some it asset. And cash it on add I take buy We're the have We vessel. go position us good add on

Charles Fratt

have one X and standpoint. Yes. of to pretty cash sort different assets Mark, Or fleet going on the that I owned you're opportunities think you in XX% mean expansion expand? the from fleet even we cap balance. of over we're would if opportunities selling looking books to a owned after -- X I expect fleet paying assessing of that the right healthy, not range? now, the end you cash, your keep older said Should up fleet still you're at a

Mark Filanowski

we're forward older some thanks. saying the talk fleet. that When is newer trading some the and we I gradually small ships ships in steps, about we'll move probably in guess, fleet Poe, way for expand renewal,

trade the that say, So it's emissions best the under -- XXXX new with the and to ships are rules, do and find that we -- need generally best built, that's later. ships

get do to So And that our that ship that market. we we But And available approaching decisions come that up ships delivery can we'll a those and position, it. in time, those to we're the next move comes a special some a are think good their a good surveys. up one are make if ships good as that on got older, chance that trades, us to with fits there's ship as are at ships. constantly in looking in we've good what surveys for

Charles Fratt

If survey you event? your or when on highlighting the is it a mind assets? one older of wouldn't next XXXX Is a special event XXXX

Mark Filanowski

but X, it's -- first is ship depends where got after this where there up. opportunity we've the the year, I I but in think there it's -- it I think, timing maybe generally trading of of on coming the is, and think

Mads Petersen

Yes.

of the year, early next candidates surveys. for the are coming So sort likely up

Charles Fratt

Okay.

of a then less ports. like acquisition than what, you X late you it a lot And the of early out -- to more maybe So 'XX. $X.X different 'XX -- million. $XX the X event, turned sort be more million, Can and did on

looking the up cash And also profile, I million within talk opportunities those of that you just talk the sort then $XX business. then other was in be context to, at? multiple capital in see growth but what in And it that looking Can you locations might of you about deploying can think, you the about talked about also that not opportunities might you you opportunities other acquisition be the You past? potential but growth X acquired, you paid? flows only at

Gianni Del Signore

think excited Poe, is we're Yes. one I about. this really

we other the it joint that operate, of under we do ports Some ventures.

have partners table. expertise that bringing are We the to

operating This it's go comes people, can acquiring ready our offer to really we and going we're currently one, to an with It entity. supplement what customers. it's equipment,

real the that customers side. So ours. on on ground already bringing have we'll assets can we labor which use. We'll of are We'll we're force that we'll solution. XXX% a ours, have customers some freight our have on, full a have are

nature bringing flexibility ownership complementary we're is I gives full this people had. So excited the of really the these assets sort us and think, of never and It of what about. we've these on, we're

it's dollars. we're a start. looking -- to We're small happy these we're buy of if hundreds to want types and to I scale at our expand for. price, deploy we think millions don't do we exactly it operations, But purchase of can of what The expertise,

and From we expect EBITDA. least the it we as $X.X of And going million, offering expand -- think we that's And an add deliver. that that earnings we're that's we to operating at it have we components to grow. grow perspective, it the company the But business to to to really and add to this, expect freight I an what to that start. million start, contribute to to able look $X expand and can

Charles Fratt

you. Got

Xx a than EBITDA less So multiple.

Mark Filanowski

to We make hope That's so. what hard we're sure. working

Charles Fratt

first that, of quarter. in if Okay. And -- That if with questions? back, of I One up last modeling million the queue can can look Is G&A going quarter the your last I of changed, going model OpEx and the a you and what's how to understand then of out G&A of out instead was the year coming changed. getting ask -- there versus $XX.X and just forward? is couple just the G&A, flat as total, me you mentioned Gianni, year. sort that at for OpEx and the on OpEx help fourth quarter from mix versus But you

Gianni Del Signore

I think So operating little expenses, those our made prepared in costs. the in remarks, stabilization a more bit we comments I see

Crew people to remain That's of expect we're market, average, QX these big start cost around. we the costs. stabilize moving consistent sort costs some of an that travel other for driver really of in the inflated but it in think seeing and sort our was to I still this year.

And we're year average average QX of well QX certainly the below 'XX. our happy see drop sort our to below below for and full -- of XXXX

what of the I we of it's, for pretty thing. So year. same QX, rest And G&A, the expect are I think, reflective cost the I think for think,

much. I slight but maybe reduction, think see we'll a not

see and that doing. rest We we out what have year. for I I of just the customers increasing a going it's function and more probably think to some of are run the -- we're exactly And be clients, People a should travel. do will are be pretty costs. think there it's rate

So but increasing far as don't for as -- expectations I so. that, think

and be I the maybe the range, think QX of around slight year. a we'll that balance decrease in

Charles Fratt

Great.

it's to this Just been rest your about common which one year? income back the in also interest last one how that shareholders, get was second since only income second of is just it net you noncontrolling net the the helpful that the to but of down Can should quarter actually quick not trending when quarter. model of talk you quarter out XXXX, we forward,

Gianni Del Signore

right? kind So earnings are there's of above or a recorded portion that's interest and those a net above There's two as sort line there's of long-term of minority noncontrolling the income. interests, liability, that recorded

that And joint driven largely share. The then entity venture below expenses. paying puts cover on charter a that operating of debt, earnings the the our is at that Ice -- profit that joint by noncontrolling cash is Class a the XA we're to Largely is to the venture, JV the interest from breakeven -- X us are that hire cover largely which Panamaxes. consolidated

of profit And the coming are earnings share. out companies most of those from

So as of in to profit we increases we'll increase see that in allocation joint venture. the an see market,

that was will below earnings generating start tick 'XX profit. significant where QX average So of just a that company

profit market variable it that that be variable. -- all it's all it's So company. share, us, probably profits take increase. and and of see of ownership venture for as we'll of a joint the that and is to number, obviously that -- is all the We improves, we're way But structured beneficial losses taking the

your question, So variable it's number... -- is hope but that a it I answered

Charles Fratt

did. reverse will more there's because coming that trend Yes, hopefully The it means through profits no, yes, the it JV.

Gianni Del Signore

Right.

Operator

CEO, call appears we have no remarks. this further It or additional any [Operator back time. at to I'll closing Instructions]. questions Mark Filanowski, turn for the

Mark Filanowski

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

may disconnect. now You

Operator

may you at and for Thank disconnect does this And time. participation, conclude program. today's you your any

Pangaea Logistics Solutions (PANL) 11 May 232023 Q1 Earnings call transcript