Q1 2020 Earnings Call

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This time I would like to welcome everyone to the pendulum logistics solutions first quarter two sounds it's funny earnings teleconference.

Our hosts for today's call Mr., Ed Cool, Chairman and Chief Executive Officer.

And Mr. Gianni Delsignore Chief Financial Officer.

Today's call is being recorded and will be available for replay beginning at 11 am eastern time.

Recording can be accessed by dialing 805 858367.

For 4045373 406.

Referencing I'd number three to 89376.

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It is now my pleasure to turn the floor over to Miss is typical on a car with prosek partners.

Thank you Maria and thank you for joining us for this morning's first quarter 2020 earnings conference call Scarping jail logistic solution without today from the company I, Chairman and CEO, Mr. I'd call and Chief Financial Officer, Mr. Gianni Delsignore.

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

This conference could contain forward looking statement within the meaning of the private Securities Litigation Reform Act of 1995 about pen jail logistic solution.

Forward looking statements our statements that are not based on historical facts such forward looking statements are based upon the current beliefs and expectations a pen jail logistic solutions management and are subject to risks and uncertainties, which could cause actual results to differ from the forward looking statements.

Such risks are more fully discussed intangible logistic solutions filings with the Securities and Exchange Commission.

The information set forth hearing should be understood in light of such right.

Tim jail logistic solutions does not assume any obligation to update the information contained at the conference call.

Also please recall that supplemental slide presentation will accompany this call those slides can be found attached to the 8-K that was filed with last evening's relief, which is available on the investors section Www Dot pin Jr. LLS dot com onto a company filing for on the Fccs website.

At DC Dot Gov.

Now I'd like to turn the call over the 10 jail logistic solutions, Chairman and CEO Mr. I'd call Ed.

Thanks, Tia and good morning to all of you and thank you for joining us on the call.

This morning, I'll provide an update on our operations and the overall market before turning the call over to Gianni our CFO.

To provide a more detailed overview of the first quarter.

Naturals.

Well then open the line for questions.

We hope you've had time to review our press release in the accompanying presentation, which were issued last evening.

First I'd like to begin bikes crushing good wishes to you and your families I hope that everyone is healthy unsafe and our torture with all of those.

In back and impacted by calls at 19.

I'm very thankful to the health care professionals and essential workers for their work in the whole global community.

Especially thankful for all our crew members wasn't on border ships for extra months.

We continue to do more than their part in making sure global supply chains continue to work properly.

As always Sanjay remains committed to the health and wellbeing of our employees.

And we use a company will continue to always follow all they get regulatory guidance and good practices when it comes to operating our business safe.

First quarter 2020.

Shipping markets in which we participate continued on a path of volatility.

The year 2019.

The Baltic dry index ranged from 595 to 2518.

The BTI average 549.

During this years first quarter.

Our quarterly results were negatively impacted by the slow market.

The first quarter is typically a comparatively weak one for us than for the industry. This year, we experienced a warmer than normal winter in the Baltic Sea and the demand for ice class tonnage was impacted.

Fuel costs decreased operating margins temporarily as we began to consume higher cost fuel.

Matt I M O 2020 compliance requirements.

And the precipitous drop in oil prices and bunker cost cost us to lose.

$2.8 million this quarter and bunkers swaps that we had to home to protect our future operating margins.

Our chief TC rate continued to outperform against the average at the bolt Baltic Panamax and Supramax indexes.

Despite a 13% decrease in order to achieve Tc rates from last year's first quarter.

We exceeded the average market rates by 78%.

She is attributable to our long term contracts of affreightment specialized fleet and cargo focused strategy.

I'll now summarize our results for the quarter.

Total revenue increased to 95.9 million for the three months ended March 31st 2020.

79.5 million for the same period in 2019 due to an increase in shipping days.

We reported a net losses.

During Q1 or 2020.

As compared to 3.7 net income in Q1 of 2019.

Our Tc rates were down 13%.

From the from $12029 into Q1 2019 to 10500.

In Q1 or 2020.

Lastly, we hold cash cash equivalents unrestricted cash of $42.5 million.

We simply do not know what's in store for all of US in the short term there in the core Vin pandemic, but we see signs of some loosening up of the Lockdowns in some places, especially in Asia, where the virus first Kid rock.

Optimistic about the summer season.

Which is strong for us and at this point, we expect our baffinland business will be on affected.

We're also hopeful that business will pick up again for the western countries second half of the year.

We continue to be opportunistic as we always are you continuing to deliver best in class services for clients looking to acquire new vessels when opportune sort of these rise.

And to a new owned fleet.

We look forward to updating you.

Developments in the coming quarters, and with that I'd like to turn the call over to Gianni to provide additional details from the financials.

[laughter]. Thank you Ed and thank you all for joining us on today's call.

Again, we hope everyone remains healthy and safe because we all the job to new work environments, and we think our employees and crew further extra efforts during these unprecedented times.

Before walking through our financials I'd like to expand upon its earlier comments and how we navigated another challenging market.

2020 began with a significant environmental regulation change for the shipping industry and expect to IMO 2020 complaints fuel.

The collective move towards compliance and stemming bunkers for our roughly just prior to the started the year.

Resulted in increased bunker expenses during the first part of quarter.

Of course this is not the market, we'd like to be and I were however, as we've said in the past our business model is built to limited downside risk as it did in 2016 and as we currently make our way through 2020.

While we recorded a net loss for the period.

Our nimble cargo driven charter strategy delivered a 78% premium over the average of the Baltic Panamax and Supramax indexes.

The market volatility also presented an opportunity for us as we capitalized on low rate environment to improve our cost of capital by fixing interest rates on the bulk endurant.

Pride in bulk independent debt facilities in March.

We were also fortunate to sell the schools prior to the decline in the market generating approximately 8.3 million in cash proceeds and ending the quarter with 42.4 billion of cash and cash equivalents as we maintain our strong footing and these uncertain times.

With that I'll now turn to our first quarter financial.

[noise] voyage revenue, which are revenues generated from Korean cargo for clients was 86.5 million.

An increase of approximately 31% compared to 65.9 million for the same period in 2019.

This was predominately driven by 25% increase and voyage days.

Our Tc rates decreased 13% to 10 $10508 per day from 12000 in $29 in the first quarter 2019.

However, the company as a cheap Tc rates continue to outperform against published market rates by approximately 78%.

Charter revenue sure opportunistic and tied to market rate decreased to 9.4 million compared to 13.7 million in Q1 or 2019.

The decrease in charter revenue was due to a decrease in market charter rates and a decline in charter days.

Voyage expenses were 47.8 million compared to 32.2 million for the same period in 2019.

The increase of approximately 49%.

This was driven primarily by 25% increase voyage days.

And an increase in bunker expenses due to timing of bunker stems in late 2019 to comply with IMO 2020 fuel requirements.

[noise] charter hire expenses were 20 to 32.3 million compared to 24.9 million for the same period in 2019, 30% increase.

This is primarily due to 35% increase in charter days.

As we traded in addition, additional content to replace owned vessels that were sold.

As well as vessels in Drydock during the first quarter to meet cargo demand.

As we continue to rebalance our fleet, we redeliver vessels to their owners in charter in new tonnage at lower costs.

Vessel operating expenses on a per day basis were up by only 2.5% from $5098 a day in Q1 of 19 to $5229 in Q1 of 2020.

Net loss for the quarter ended March 31, 2020 was 6.8 million or 16 cents per share compared to $3.7 million net income or nine cents per share for the same period in 2019.

Moving onto the balance sheet and cash flows restricted cash and cash equivalents for 42.4 million in Q1 compared to 61.6 million in Q1 of 19.

Net cash used in operating activities was 6.6 million.

Compared to 12 million of cash provided by operating operating activities in Q1 of 19.

Net cash provided by investing activities was 7.5 million.

In Q1 hundred 2020, as a result with the sale of vessels compared to a use of cash of 11.6 million. During Q1 of 2019 due to the acquisition of the bulk spirit in February 29 team.

Finally, net cash used in finding financing activities totaled 11.2 million in Q1 or 2020 due to the early purchase option on the bulk periodic finance lease facility.

Compared to 5 million provided by financing activities in Q1 of 29 team as a result of the financing of the bulk Sperry in March 2019.

We continue to evaluate our dividend on a quarterly basis to ensure we are implementing a capital allocation strategy.

Optimizes, our business and by extension maximizes shareholder value.

For this reason, we're being conservative what our dividend policy and not declare a dividend this quarter ultimately shareholders will benefit from improved earnings which is what we believe we are positioning our company to achieve.

With that I will now turn the call back over to Ed for any additional remarks before we get we came in a portion of the call.

Yes.

Thank you Johnny.

We thank our customers our business partners and our shareholders for their continued.

Commitment and partnership and we look forward to updating you further in coming quarters.

I will open the floor for questions.

Thank you Sir the floor is an open for questions.

We wish to ask a question at this time. Please press Star then the number one on your telephone keypad again that star one.

I'm showing that we have no questions at this time.

I'd like to turn the floor back over for to management for any additional or closing remark.

Good. Thank you for old for taking the time to join US This morning, and a have a good day and everyone. Please stay safe.

Thank you ladies and gentlemen, this does conclude today's conference call you may now disconnect.

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