PANL - Earnings call transcript Q1 2024 | Pangaea Logistics Solutions, Ltd.

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Operator

Good morning, my name is Brittany, and I will be your conference operator today. At this time, I would like to welcome everyone to the Pangaea Logistics Solutions First Quarter 2024 earnings teleconference. Today's call is being recorded and will be available for replay beginning at 11:00 a.m. EST. The recording can be accessed by dialing (877) 856-8964 for domestic and or (402) 220-1608 for international. now Neely to with is over the It Stefan to Vallum Instructions] my turn pleasure floor [Operator Associates.

Stefan Neely

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

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

I prepared we the line of turn open conclusion call over our the to At remarks, like would Mark. to With will that, the for questions.

Mark Filanowski

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

Our market. premium flexible cargo-focused business over the deliver rates TCE model continued to prevailing

the higher During the resulted also which drive to improved year, prior compared us in operating allowed leverage EBITDA year-over-year. improved to and margins quarter, adjusted first it

While the period we global demand COAs. soft from a first normally demand, a voyage fleet bulk across of is elevated long-haul ice-class together premium long-term seasonally benefited our dry with for base quarter solid

which commitments vessels, rates began more utilization increase to of returns. cargo us we quarter, chartered our our our in TCE market As fleet to to rise the to later added owned and optimize in positioned

adjusted as quarter improved million. EBITDA of million EBITDA the EBITDA combined, compared XXX $XX.X by the We index of basis rates strengthened by nearly quarter, adjusted income for factors points Adjusted XX% to exceeding $X.X our reported benchmark in first by of and margins year-over-year TCE the quarter first When the our XXXX. XX%. for adjusted these resulted net

increase XX% vessels, for supported dry At earned confidence in the constrained. the business. Our quarter. also supported These outlook by of improved supply in a vessels published the us year-over-year XX% give macro Panamax in and long-term and and strong remains a our the which rates the for TCE near-term bulk first demand for global rates year-over-year Supramax in was remains both level, our increase profitability dynamics market own

Specifically, the geopolitical in near an in resulted certain term, demand increase shipping in with have disruptions ton-mile channels.

are also the associated bulk current key in strong of investment regionally in infrastructure demand with We seeing level North America. trades

new In on On and remainder will beyond. historical the relative builds higher for being combination, of supportive capacity. to for for supply XXXX of which front, remains dry market see rates dry the levels, bulk the we pressure structurally the bulk service put to number limited factors supply into coming and continue demand

that our positions business volatility to navigate. said, uniquely be will a successfully that model X With cargo-focused but prevailing continue theme to us

$XX,XXX per of the shipping XXXX. per have rate have certain improve. moderate first of markets progressively day X,XXX the at TCE While dry over market bulk Through day quarter, second approximately others of far rate seen continued the a we've booked aspects pricing today, average versus quarter in $XX,XXX since an in days so late to

Strategically, scale onshore our we investment in continue to fleet capabilities. renewal expansion prioritize while continuing logistics and capital to

balance our of capital to we'll consistent return as to consistent inorganic to organic seek further while by our these In dividend. and quarterly addition continuing a cash investments, fortify all support program sheet, demonstrated

that to we fleet our to fleet on an owned focused current years, while customers. meet refreshing unique we of needs to vessels, continuing vessel been ensure age of have cargo able are approximately XX keep of Regarding average our our

in we line. purchase announced agreement last entered X deadweight built sister acquisitions night, divestitures and this And vessel to ton to XX,XXX into ships We continue strategically had evaluate we additional through an XXXX.

of price $XX.X are delivery We combined purchasing the we year. quarter million for expect this to during of take and ships third these a

in that port expand logistics Gulf we to the strides through operations, and our made organically have business, Within Coast U.S. and leases. joint region partnerships business site strategic

we quarter, commodities bulk that of handle fleet Port lease agreement a the to on the to vessels. Tampa executed long-term During in are carried those first dry our complementary

In existing in to conjunction JV we we offer region lease, for expand a to investment also expanded to at cargo-focused avenue The services meaningful the in stevedoor ability last strategically the our provide with June port. business, partnership terminal allow Florida partners in this year. important wider port of across committed signing scope infrastructure which us into and will of investment customers. both Coast This operations capital growth investment Gulf new some with will our a and

that continues business model continue we to growth positioned we Coupled returns In business returns, supportive we with deliver focused deployment. key investing strategically in cargo summary, rates, opportunistic believe our our are both to deliver which well for dry logistics in through opportunities, to capital strong bulk environment premium are attractive a our owned fleet. shareholder and vessel macro in

now I'll financial for discussion hand first of quarter our Gianni over it a results. to

Gianni DelSignore

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

shipping financial Our model to our emphasize continue flexibility the as of we returns deliver a were reduction in to business year-over-year results first despite days. premium total able quarter

our creates strategy operating the model highlight chartered-in overall results within value the Our context of and that cargo-focused our leverage.

day, per average supported class is XX% ice TCE the bookings, rates cargo in $XX,XXX by long of rates which over market forward locked the period performance. approximately and quarter published rates a approximately which performance early in vessels haul Panamax and were in for quarter the premium First for Supramax

million. XX% year-over-year EBITDA adjusted Our nearly to $XX.X by increased

to adjusted leverage. market we our returns rate vessel our to margin TCE accordance managed as the improved and rates in utilization prevailing Our operating maximize XX%, to EBITDA year-over-year also

by the chartered-in While market quarter hire due the compared by increase charter our in total our days XX% prevailing rates. of decreased the to XXXX first to year-over-year, XX% expense XX% increased

today, we've XXXX. booked day through was Our approximately on And first charter-in $XX,XXX approximately cost basis at a the quarter X,XXX in days per per day. $XX,XXX of

improved our forward with some in commitments quarter intra-quarter strategy. in cargo returns maximize of total by fee, per fleet profitability pushed short-term quarter first of rates, XXXX. mentioned, the Furthermore, first year-over-year average $X,XXX toward charter-in our our bolstered X% which of to vessels hire expenses, operating from net us face charter was an accordance in I decreased management on allowed last year the which technical the lower our day for $X,XXX day vessel higher market of our by As we per to of

The the our operating decrease to to manage highlight success efforts of costs. vessel continues

have to our bunker As lock the approach in but minimize impact exposure the contracts selectively reported forward and hedge forward agreements period-to-period to freight bookings. flows our basis. This cargo of us mentioned future on swaps we in cash and to can our we fluctuations past, in results helps market on a volatility lead long-term utilized and market the

our to Given cap. an the million the agreements year. Pangaea reported In share or compared for reflects first $XX.X unrealized income approximately market relating net volatility income of during in net the $X.XX quarter, adjustments of bunker the our million diluted quarter million gain interest was freight quarter swaps, $X.XX $X.X first share total, forward of mark-to-market reported to rate last or our per first and to attributable GAAP $X.X per diluted

instruments I losses from of as unrealized other derivative adjustments. as well excluding mentioned non-GAAP When the that the impact

$X.XX share, during $X.XX or quarter diluted per reported was the $X.X versus increase million Our an adjusted or to attributable diluted of $X.X quarter Pangaea first net share million per last of income year. the

of million At the to decreased profitability timing $XX improvement the a the Total was balloon a on X.XX%. company supplier operations reflected this in obligations year-over-year cash million total currently by in payment in million month including $XXX end, Moving approximately from quarter maturity the $X is million. this offset in flows. approximately and debt, capital. cash credit that had debt, is payments in represents fixed and locked of customer rate finance of million at cash working at of the to Of facility $X.X loan, $XX.X by lease million $XXX net as receipts due

Pride, a paid, to expected and only, Bulk cash new and finalized Bulk actively generate Bulk Independence the weeks. in lender vessels are fleet, refinance will the to debt-free which be working Bulk of Once million $XX Endurance we and with in our coming approximately the will be Endurance is

was to we to relatively see adjusted deposits, Xx. first and rates At generated nearly which debt. quarter, million rate quarter, our income. as the the cap muted impact debt continued due fixed well from $X EBITDA from of interest the net interest-yielding XX-month higher interest trailing to in rate the During benefits of ratio end as

profile in to As ways vessel owned and and expanding investment. and Mark deploy focus overall in our balance sheet that the our in onshore our allows by maximize current growth capital on returns us XXXX is allocation mentioned, footprint capacity, flexibility capital liquidity investing

cycle. dividend we sustained strategy. prioritize that believe of We can X is reiterate be that continue our that would Importantly, I the return consistent current a market capital to through

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

Operator

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

Liam Burke

vessels chartered-in then flex XX that user reflective you Gianni anticipate more number And the typically, you in your typically think gave quarter, end fleet, chartered-in end on Mark, in the quarter. is than chartering vessels, XX-ish XX us about a sort the first of way, But partial vessels of when for which the is range. in you second the of low a in I demand? Do way of quarter? the

Mark Filanowski

to started the have Liam. the the end quarter, right. it slimmed the question, the wasn't market quarter, didn't quarter, and of so the -- to you chartered the Thanks expand in market in-fleet. down look started us toward for we great the In But But it early fleet. yes, back we and to the come first

the up. looking should chartered-in So market moves base the up as forward, the as go yes, market

Liam Burke

lower I quarter. and chartered-in first than day Gianni quarter-to-date they were quoted your price a And rates, the on mean,

So is little a lift that . see where we margin there? could trend continuing

Mads Petersen

We take course. we a where here. the of is hope Mads ship. reflection Liam, It all of so,

we the the ship and you cost the it when pick Atlantic, different Atlantic. has take you it the If a move up than out into Far in in them East

that real I there's you specific So there the project, Very individual know a to can opportunity. unfortunately. don't if trend

Liam Burke

vessels Great. be And delivered the then half. the X just in bought real quickly, new will you second that

a have balloon You payment.

cash balance large a that refinancing. have address can your You

that You vessel. will I presume go refinance new of to vessels. refinance only X acquisition the X the

Mark Filanowski

Yes.

due think the actually. I week comes next balloon So

the said, are are you a like just are Bulk the then we off And Endurance. balloon. pay we refinancing we we in will -- So position,

So new fleet. some that Bulk Bulk offset the Independence we'll X the of the portion a and And Pride debt-free vessels on the use as yes, equity add we'll vessels. the to of in

in But to we new sometime but well, is delivery finance like looking QX. the do intend as vessels

a handle well. as vessels expect plan how to finance So have little bit that. also on time we want we'll But those level I a we of to certain

Operator

Fratt our take from with next question We'll Poe AGP.

Charles Fratt

ships? Can you little on the a detail more what's X the us vintage the acquisitions, give on

Mads Petersen

XXXX. in built are They Sure.

So that typically that that have of our done historically where XX-year range acquisitions. X- we most is secondhand to is

So our X these we build. often the feel that for sister ships that that, come business model. like a ships that fit fits great up not are It's

So about our we transaction, are pretty we put excited wait can't them to business. to work in and that

Charles Fratt

tonnage? will gaining more think And charter essentially be Or for these do then you Mads, substituted it's expansionary?

Mads Petersen

think is of part a break ship think So that's was we of linked. the anticipate I of the I we -- right? I in, But of reduction things there's X chartered-in a a renewal year, be one-to-one closely maintenance fleet, it it. did sort Well, last of that bit don't sell -- think don't December shouldn't a

Mark Filanowski

which to Poe, own a find us ability I with cycle, chartered-in us a gives to allows fleet think larger leverage commitments, the more fleet more ships. continual little a more cargo it's bit

little is element. to it is this there bit a bit -- So fleet of element growth of little a replacement a and

Mads Petersen

we our is we we our think in our sure make I to have have their demand customers as we're also, with Poe, volumes anything, across the in if that model serve that ships that business good that a that the experiencing we reflection belief And the and grow. want in can

Charles Fratt

and said You to just like vessels? then it the was that on Mark, clarify, sort that or support cargo the you didn't thought, And rate to saw fleet right? volume. quarter because what volume was early just cargo flexed And the more in looking chartered-in just cargo the Understood. ties You're market perspective, didn't soft. wasn't in from your you've see side? the the that from earlier to, you a of certainly Or in call you down

Mark Filanowski

make cargo, it's at the see we're expand see the profit to opportunity Poe, we're position we chartering to Really, and looking a much us on in, right fleet didn't we opportunities in places ships that for out to and them. when make the money the

and is constant can do with So market the daily of where it's what a study it. we

Charles Fratt

of forward your quarter a about the TCE talk first drop of TCE should could sort your and average you look the meaningful end your of just up? quarter -- talk rest TCE if the average cover, the at days how that's context forward then $XX,XXX about the might Can quarter And of you rate Understood. where average. from covered sort and we X,XXX pretty for

Mads Petersen

Yes.

question, good about a to what Mark about the fleet. that's think previous And Poe. -- going I just said with chartered-in growing the question earlier back

that we by when business part we way this grow -- the the the So is backhauls. historically of is do through that

So we that will backhaul some have doing are ships barges.

sort that not of element on of quarter number the And as do to fronthaul, finished. course, our that a So in business right? traditional there's is is high lending when as they an not

contribute that think over year, So backhaul for the positively. like will we're we sure, these investments now making to

Charles Fratt

$XX,XXX concerned at I should mean, you're of I Yes. booking in that you're chartering $XX,XXX. Okay. be

Mads Petersen

you We This mostly not is quarter, do yes, But for anticipate what sure, every of right? result we that's forward, should. it [indiscernible]. going

the have at cargo on positioning pretty investment different fixed quarter. voyages the levels, also We were books some a in that meaningful in but

Charles Fratt

Okay. And year. the will talk for just the out or second Could was working the about balance of over then Gianni, you rest quarter. that pretty the negative capital quarter just

we if derivatives you're where a right should second us working at of on your the look look could that all give then how just And capital in would So quarter? now, helpful. be snapshot mark-to-market you

Gianni DelSignore

Yes.

we capital, due maintain that been Even the were the grow. has And payment largest of since for if But the sort on recognition So anticipating week. balance there strong. to working a impact of debt remaining been that there that's cash while. the comes continues it next is balloon and

towards cetera. chartering So we're acquisitions, allocating -- et it towards ships building up towards

payments, ratio, we refinance, working far think we we'll handle as that capital balloon improve. see and So we'll as once I the see that

Charles Fratt

we the do gains the Or some does look your in you then right so that book derivative quarter unrealized in quarter. should relative expect And the the the unrealized how first losses? look had Okay. far derivatives to Flat, now? how

Gianni DelSignore

to we Yes. cap, that that maybe interest components gain, didn't mark-to-market of knew at of interest and Well, the what there's that. -- then X bunker Interest expectations were FFAs. last There's X there's There's cap some pressure there rate negative cap. the materialize. because rates what year, end of there's happened derivatives on the right, rate on was

quarter to see a there. value did So from in we pickup year-end the first

think they've relatively bunker the And flat. derivatives and FFAs, I remained

interest So even also rate cap, has looking think -- and flat. I remained that the with ahead relatively

our So significant I book don't expect volatility when it for to derivative comes QX.

Operator

line program further We closing or have this time. on turn any additional for the to remarks. We'll no over questions back Filanowski at the Mark

Mark Filanowski

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

You may now disconnect.

Operator

this your again, does participation. once for Thank And conclude you program. today's

time. any at disconnect may You

Pangaea Logistics Solutions (PANL) 10 May 242024 Q1 Earnings call transcript