Q4 2023 Pangaea Logistics Solutions Ltd Earnings Call
Operator: Good morning. My name is Todd, 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 2023 earnings teleconference. Today's call is being recorded and will be available for replay beginning at 11 a.m. Eastern Time.
Good morning, My name is Todd and I will be your conference operator today.
At this time I would like to welcome everyone to the Pangaea lit.
<unk> solutions fourth quarter and full year 2023 earnings teleconference.
Today's call is being recorded and will be available for replay beginning at 11, a M eastern time.
Operator: The recording can be accessed by dialing 800-839-5630 for domestic users or 402-220-2557 for international users. All lines are currently muted, and after the prepared remarks, there will be a live question and answer session. If you would like to ask a question during the Q&A segment, please press star 1 on your telephone keypad. If your question has been answered, you may remove yourself from the queue at any time by pressing star 2.
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Stefan Neely: We do ask that you pick up your handset for optimal sound quality. It is now my pleasure to turn the floor over to Stefan Neely with Valum Advisors. Please go ahead. Thank you, operator, and welcome to the Pangaea Logistics Solutions fourth quarter and full year 2023 results conference call. Leading the call with me today is CEO Mark Filanowski, Chief Financial Officer Gianni Del Signore, and COO Mads Petersen. Today's discussion contains forward-looking statements about future business and financial expectations. However, actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the SEC. Except as required by law, we undertake no obligation to update our forward-looking statements.
We do ask that you pick up your handset for optimal sound quality.
It is now my pleasure to turn the floor over to Stefan Neely with Vallum Advisors. Please go ahead.
Thank you operator, and welcome to the Pangaea logistics solutions fourth quarter and full year 'twenty twenty-three results conference call.
Leading the call with me today is CEO, Mark filling ASCII, Chief Financial Officer, Gianni del Signore and C O O Mats Peterson.
Today's discussion contains forward looking statements about future business and financial expectations actual results may differ significantly from those projected in today's forward looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the SEC, except as required by law, we undertake no.
Location to update our forward looking statements.
At the conclusion of our prepared remarks, we will open the line for questions.
Mark L. Filanowski: At the conclusion of our prepared remarks, we will open the line for questions. With that, I would like to turn the call over to Mark. Thank you, Stephan, and welcome to those joining us on the call today. After the market closed yesterday, we issued a release detailing our fourth quarter and full year 2023 results. Our results were a good finish to the year as we continue to achieve a consistent TCE rate premium above our benchmark index. However, the fourth quarter is generally a slower period for Pangaea as we exit the peak of our Arctic trade season. Ongoing geopolitical trade disruptions have led to increased demand within our traditional trade routes, contributing to increased shipping days in the period, together with a corresponding increase in freight. We reported adjusted net income of $7.4 million for the fourth quarter and $31.4 million for the year. For the fourth quarter of 2023, our adjusted EBITDA of $19.7 million, though strong, declined on a year-to-year basis, even as our TCE rate exceeded our benchmark BSI index by 27%.
I would like to turn the call over to Mark.
Thank you Stephanie and welcome to those joining us on the call today.
After the market closed yesterday, we issued a release detailing our fourth quarter and full year 2023 results.
Our results were a good finish to the year as we continued to achieve a consistent TCE rate premium above our benchmark indices, well fourth quarter is generally a slower period for <unk> as we exit the peak of our Arctic trade season ongoing geopolitical trade disruptions have led to increased demand within our traditional.
<unk> trade routes contributing to increased shipping days in the period.
With a corresponding increase in freight rates.
We reported adjusted net income of $7 4 million for the fourth quarter and $31.4 million for the year.
For the fourth quarter of 2023, our adjusted EBITDA of $19 7 million those strong declined on a year to year basis, even as our TCE rate exceeded our benchmark BSI index by 27%.
Mark L. Filanowski: Market rate volatility can be impactful over quarterly periods, but our business model smooths the effects over longer periods. Our markets in the current quarter are showing surprising, on a seasonal basis, as global trade disruptions that led to persistent market inefficiency, a dynamic supportive of a structurally higher freight rate environment, with supply growth limited by worldwide shipbuilding capacity to produce new ships in our segment. We think there's a long runway for continued strong.
Market rate volatility can be impactful over quarterly periods, but our business model smooth.
The effects over longer periods.
Our markets in the current quarter are showing surprising strength on a seasonal basis as global trade disruptions have led to persistent market inefficiencies.
<unk> supportive of a structurally higher freight rates environment.
With supply growth limited by worldwide shipbuilding capacity to produce new ships in our segment.
We think there's a long runway for continued strong performance.
Mark L. Filanowski: Beyond the favorable dynamics being created by geopolitical disruption, we continue to see strong demand growth in the core trades that we serve, specifically construction aggregates, cement, and iron ore and iron products. Through today, we've booked over 3,500 shipping days at an average TCE rate of $17,430 per day versus a market rate of approximately $13,000 per day in the first quarter of 2024. Given these favorable underlying demand conditions and our expanding cargo book, we intend to prioritize capital investment in fleet expansion and renewal while continuing to scale our onshore logistics capability. In addition to these organic and inorganic investments, we seek to further fortify our balance.
The favorable dynamics being created by geopolitical disruption, we continue to see strong demand growth in the core trades that we serve specifically construction aggregates cement and iron ore and iron products.
Through today, we've booked over 3500 shipping days at an average TCE rate of $17430 per day versus a market rate of approximately $13000 per day in the first quarter 2024, given these favorable underlying demand conditions and are expanding.
Cargo book, we intend to prioritize capital investment and fleet expansion and renewal, while continuing to scale alright onshore logistics capabilities.
In addition to these organic and inorganic investments, we will seek to further fortify our balance sheet, all while continuing to support a consistent return of capital program as demonstrated by our consistent quarterly cash dividend.
Mark L. Filanowski: All while continuing to support a consistent return on capital program as demonstrated by our consistent quarterly cash dividends. At a strategic level, we remain focused on providing a growing base of integrated shipping and logistics solutions that address. To that end, following the acquisition of three Marine Port Terminal operations in Florida and Maryland in mid-2023, we've been actively working to expand our onshore relationship, with new and existing customers. During 2024, we will expand our footprint across the U.S. Gulf Coast and in Florida. Strategic, Joint Operations, Partnerships, and SiteLease. We believe this approach is a lower cost, less capital-intensive method of entering a market, albeit one that allows us to build stronger relationships with current and potential customers. Center on Building Around Our Ocean Transition.
At a strategic level, we remain focused on providing a growing base of integrated shipping and logistics solutions that address the unique demands of our customers.
Did that and following the acquisition of three Marine Port terminal operations in Florida, and Maryland in mid 2023.
Been actively working to expand our onshore relationships with new and existing customers.
During 2024, we will expand our footprint across the U S Gulf Coast and in Florida through strategic joint operations partnerships and site leases.
We believe this approach is a lower cost less capital intensive method of entering a market, albeit one that allows us to build stronger relationships with current and potential customers and are centered.
On building around our ocean transport offerings.
Mark L. Filanowski: This accelerating dry bulk demand growth, the limited volume of new build dry bulk vessels scheduled to enter service over the coming years, and a focus on expansion of our fleet and port terminal operations sets up for a favorable strategic success in 2024 and beyond. With that, I'll turn it over to Gianni for a deeper discussion of our fourth quarter financial results. Thank you, Mark, and welcome to all of those joining us today.
This accelerating dry bulk demand growth limited volume of new build dry bulk vessels scheduled to enter service over the coming years and our focus on expansion of our fleet and Port terminal operations sets up.
For a favorable strategic success in 2024 and beyond.
With that I'll turn it over to Johnny for a deeper discussion of our fourth quarter financial results.
Thank you Mark and welcome to all of those joining us today.
Our fourth quarter financial results continue to emphasize the flexibility of our business model.
Gianni Del Signore: Our fourth quarter financial results continue to emphasize the flexibility of our business model, as we were able to deliver premium returns amid market volatility, strong year-over-year growth, and shipping days, all while reducing our vessel operating expenses per day. Fourth quarter TCE rates were approximately $17,684 per day, a premium of 27% over the average published market rates for SuperMax and Panamax vessels in the period, which is supported by ice class performance early in the quarter, as well as our long-term COAs and forward bookings, which lock in rates for future cargo performance. Our adjusted EBITDA declined year-over-year to $19.7 million.
As we were able to deliver premium returns amid market volatility strong year over year growth in shipping days, all while reducing our vessel operating expenses per day.
Fourth quarter TCE rates were approximately $17684 per day, a premium of 27% over the average published market rates for Superman and Panamax vessels in the period.
Which is supported by ice class performance early in the quarter as well as our long term seaways and forward bookings, which lock in rates for future cargo performance.
Our adjusted EBITDA declined year over year to $19 7 million.
All right adjusted EBITDA margin also declined year over year to 14.9% given volatility in rates, which negatively impacted our charter in expenses.
Gianni Del Signore: Our adjusted EBITDA margin also declined year-over-year to 14.9%, due to volatility in rates, which negatively impacted our charter expectations. We also recognized an unusually high canal transit fee during the quarter, resulting from environmental disruptions at the Panama Canal. This fee resulted in a $1 million negative impact on our adjusted EBITDA during the fourth quarter and a reduction in our overall TCE earnings. During the fourth quarter, we saw a year-over-year increase in charter-in days, which increased 33% due to increased demand from our customers and our ability to supplement our fleet with chartered investment. However, in accordance with our short-term charter-in strategy, we recognized higher spot charter-in rates in comparison to our overall TCE, resulting in margin compression, which may happen during times of rising rates.
We also recognized an unusually high canal transit fee during the quarter, resulting from environmental disruptions at the Panama Canal.
This fee resulted in a $1 million negative impact to our adjusted EBITDA during the fourth quarter and a reduction in our overall TCE earned.
During the fourth quarter, we saw year over year increase in charter in days, which increased 33% due to increased demand from our customers and our ability to supplement our fleet with chartered in vessels.
However, in accordance where our short term charter in strategy, we recognized higher spot charter in rates in comparison to our overall TCE.
<unk> and margin compression.
[noise], which may happen during times of rising rate environment.
Through today, we've booked approximately 1400 charter in days at an average cost of 17100 per day in the first quarter of 2024.
Okay.
Furthermore, this dynamic was offset by lower vessels lower vessel operating expenses net of technical management fee, which decreased by 4% year over year from an average of $6200 per day last year to 5900 per day in the fourth quarter of 2023.
The decrease continues to highlight the success of our efforts to manage vessel operating expenses.
Gianni Del Signore: Through today, we've booked approximately 1,400 Charter End Days at an average cost of $17,100 per day in the first quarter of 2025. Furthermore, this dynamic was offset by lower vessel operating expenses net of technical management fees, which decreased by 4% year over year from an average of $6,200 per day last year to $5,900 per day in the fourth quarter of 2020. The decrease continues to highlight the success of our efforts to manage vessel operations.
As we have mentioned in the past, we utilized for trade agreements and bunker swaps to selectively hedge our exposure to the market on a long term cargo contracts in forward bookings.
This approach helps us lock in future cash flows and minimize the impact of market volatility, but can lead to fluctuations in our reported results on a period to period basis.
Given the market volatility during the fourth quarter, our reported net income reflects an unrealized loss of approximately $5.7 million.
Relating to the mark to market adjustments of bunker swaps for trade agreements and our interest rate cap.
In total our reported GAAP net income attributable to Pangaea for the fourth quarter was 1.1 million or two cents per diluted share compared to $15 5 million or 34 cents per diluted share in the fourth quarter of last year.
When excluding the impact of the unrealized losses from derivative instruments that I mentioned as well as other non-GAAP adjustments our reported adjusted net income attributable to Pangaea. During the quarter was $7 4 million or 16 cents per diluted share a decrease of $6 9 million or 16 cents per diluted.
Gianni Del Signore: As we have mentioned in the past, we utilize Ford Freight Agreements and Bunker Swaps to selectively hedge our exposure to the market on our long-term cargo contracts in Ford. This approach helps us lock in future cash flows and minimize the impact of market volatility, but it can lead to fluctuations in our reported results on a period-to-period basis. Given the market volatility during the fourth quarter, our reported net income reflects an unrealized loss of approximately $5.7 million relating to the mark-to-market adjustments on bunker swaps, forward freight agreements, and our interest rate cap. In total, our reported gap in income attributable to Pangaea for the fourth quarter was $1.1 million, or $0.02 per diluted share, compared to $15.5 million, or $0.34 per diluted share, in the fourth quarter of last year.
Share versus the fourth quarter of last year.
Moving onto cash flows total cash from operations decreased by $9 million year over year to $23 9 million due to decrease in TCE rates at.
At quarter end, the company had $99 million in cash and total debt, including finance lease obligations of approximately $268 million.
Of the 268 million in debt approximately $20 million represents a balloon payment that is due in may of this year.
This credit facility is currently locked in a fixed rate of $3 96, and we are currently evaluating numerous refinancing.
<unk> as well as the potential of paying off the debt and owning the underlying vessels outright.
During the quarter, we continued to see relatively muted impact from higher interest rates due to our fixed rate and capped rate debt as well as benefits from interest yielding deposits, which generated nearly $1 million in interest income.
At the end of the fourth quarter of 2023, the ratio of net debt to trailing 12 month adjusted EBITDA was two one times.
As Mark mentioned.
Our capital allocation focus in 'twenty 'twenty four is investing in growth by expanding our onshore footprint and owned vessel capacity.
Gianni Del Signore: When excluding the impact of the unrealized losses from derivative instruments that I mentioned, as well as other non-GAAP adjustments, our reported adjusted net income attributable to Pangaea during the quarter was $7.4 million, or $0.16 per diluted share, a decrease of $6.9 million, or $0.16 per diluted share, versus the fourth quarter of last year. Moving on to cash flows, total cash from operations decreased by $9 million year Due to a decrease in PCE rates. At Quarter End, the company had $99 million in cash and total debt, including finance lease obligations of approximately $268 million.
Our current balance sheet and the strong cash flow profile of our business gives us the flexibility to be thoughtful about the most advantageous ways to finance our growth plans.
Importantly, I would reiterate that we continue to prioritize a consistent return of capital strategy.
We believe that our current dividend is one that we can sustain through the market cycle.
With that we will now open the line for questions.
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Thats Star one to ask a question.
Our first question comes from Liam Burke with B Riley. Please go ahead.
Gianni Del Signore: Of the $268 million in debt, approximately $20 million represents a booking payment that is due in May of this year. This credit facility is currently locked at a fixed rate of 3.9, and we are currently evaluating numerous refinance partners, as well as the potential of paying off the debt and owning the underlying vessels outright. During the quarter, we continued to see a relatively muted impact from higher interest rates due to our fixed rate and capped rate debt, as well as benefits from interest-yielding deposits, which generated nearly $1 million in interest. At the end of the fourth quarter of 2023, the ratio of net debt to trailing 12-month adjusted EBITDA was 2.1%.
Yes, good morning, Mark Good morning, Johnny.
Hi, Liam.
Or can we discuss.
The charter hire charter in expenses that sort of squeezed your margin during this quarter.
Flexing your fleet using leased vessel chartered in vessels as part of your overall strategy was this a short term anomaly in terms of the margin squeeze and does that make you think about your longer term strategy about chartering vessels.
Now the strategy is still solid Liam.
Yes.
It isn't unusual for us and in times of when we book cargo forward.
Today, and we don't performance.
A month from now.
Gianni Del Signore: As Mark mentioned, our capital allocation focus in 2024 is investing in growth by expanding our onshore footprint and owned vessel capacity. Our current balance sheet and the strong cash flow profile of our business give us the flexibility to be thoughtful about the most advantageous ways to finance our growth. Importantly, I would reiterate that we continue to prioritize a consistent return on capital.
Things can happen in the market that cause.
Chartered in.
<unk> to be a bit more costly.
As market rates rise.
They go the other way it becomes cheaper for us to bring in and ships. So we are careful on the cargo we book and the timing we take to that too.
Charter in ships, but when we have a big spike like we did in December.
Unexpected.
It can temporarily.
It causes a little disruption.
We're also you know most of it depends a little bit on where you're comparing to the charter in cost to the market it depends a little bit on where.
Operator: We believe that our current dividend is one that we can sustain through the market cycle. With that, we will now open the line for questions. Next time, the floor is now open for questions. If you have a question, please press star one on your telephone keypad. You may remove yourself at any time by pressing star two.
That increase in yen.
Market.
Rates occurred that occurred in the places where where we are we are active say the north Atlantic.
Yes.
North Atlantic did spike a bit more than the rest of the world. So if you're comparing.
Operator: We do ask that you pick up your handset when posing your question for optimal sound quality. Again, that's star number one to ask a question. Our first question comes from Liam Burke with B Reilly. Please go ahead.
The charter our charter end cost to the worldwide rates than we were a little bit higher than that.
Compare to just the north Atlantic market.
Okay, and then if I could if I could just add it's Johnny just just to add.
Liam Dalton Burke: Yes. Good morning, Mark. Good morning. Good morning, Gianni.
It's not necessarily well when we look at it on a quarterly.
Mark L. Filanowski: Hiya, Liam. Mark, can we discuss the charter hire and charter in expenses that sort of squeezed your margin during this quarter, you know, flexing your fleet using leased vessels and chartered in vessels as part of your overall strategy. Was this a short-term anomaly in terms of the margin squeeze? And does that make you think about your longer-term strategy of charter investment? No, the strategy is still solid.
Quarter by quarter basis, we will see these.
Essentially these reductions in margin or or expansion in margin in for example, Q1 of 'twenty two.
We were in a similar situation the mark the chartered in fleet.
Did have a negative margin for the first quarter of 2002 books. So we look at it quarter by quarter and then these the spikes in market rates can result in that margin squeeze but for the full year just to say for the full year of 2023.
The margin on our chartered in fleet was around 800, a day. So it was it was a positive and it continues to be so.
Mark L. Filanowski: This isn't unusual for us in times when we book cargo forward today and we don't perform until a month from now. However, things can happen in the market that cause the chartered in fleet to be a bit more costly as market rates rise. When they go the other way, it becomes cheaper for us to bring in ships. So we're careful with the cargo we book and the timing we take to charter ships. But when we have a big spike like we did in December, which was unexpected, it can temporarily cause a little disruption. We're also, you know, it depends a little bit on where you are comparing the charter end cost to the market; it depends a little bit on where that increase in market rates occurred. If it occurred in the places where we are active, say the North Atlantic,
So I don't think Theres any.
It didn't.
Yeah.
It is unfortunate for the quarter, but when we look at on a long term basis, it's consistent with what we want to accomplish and we believe we do look at the pieces you know what it costs us to charter in ships versus that and what those charter in ships produce against our chart.
Our cargo book or spot spot cargoes.
But but the concept here is that we free up tonnage on our own ships that can participate in.
Higher market, so, but we do he says we have to.
We're really trying to make the whole work better.
Great. Thank you Mark.
In the first quarter partial fixtures.
Sequentially, it's almost flat, where typically you would expect it to be down with first quarter being a seasonally slow quarter.
Mark L. Filanowski: The North Atlantic did spike a bit more than the rest of the world. So if you're comparing our charter in cost to worldwide rates, then we're a little bit higher than if you compare to just the North Atlantic market. And Liam, if I could, if I could just add, it's Gianni, just to add, you know, it's not necessarily, when we look at it on a quarterly, a quarter by quarter basis, we'll see these, you know, potentially these reductions in margin or expansion of margin. And for example, in Q1 of 22, we were in a similar situation, the chartered and fleet did have a negative margin So we look at it quarter by quarter, and then these spikes in market rates can result in that margin squeeze, but for the full year, just to say it for the full year of twenty twenty three, the margin on our chartered infleet was around eighteen hundred a day. So it was, and it continues to be, so I don't think there's any, you know, they didn't.
Is that primarily the Panama canal or are there other things in there that's giving you a really it looks like a seasonally strong I mean, a strong seasonally slow first quarter.
Yes, Hi, Jay mismatch.
Hi, Matt.
The Panama Canal of course has an effect, but I think the.
The main driver is also the fact that we were able to book cargoes in Q4 that we are now executing on in Q1.
Historical attractive levels so cautious.
It's it's a result of that.
So a general strengthening but also the fact that.
We were able to secure some pretty decent thing.
Hello.
Great. Thank you Matt.
Mark Thank you Jonathan.
Yeah. Thanks, Sam.
Thank you. Our next question comes from Poe Frat with Alliance Global Partners. Please go ahead.
Good morning, Mark Good morning, Good morning, Matt.
Monday Okay.
Can we just dig a little deeper on the charter hire expense. It was you know roughly.
Gianni Del Signore: It is unfortunate for the quarter, but when we look at it on a long-term basis, it's consistent with what we want to accomplish. We do look at the pieces, what it costs us to charter ships and what those charters in ships produce against our cargo book or spot cargo. But the concept here is that we free up tonnage on our own ships that can then participate in a higher market. So, although we do look at the pieces, we're really trying to make the whole work better.
Roughly $34 million for the quarter.
Do you have I'm calculating that your charter in days were about 17.
100 <unk>.
1750, and so I'm calculating that chartered in expense in the fourth quarter of just over 19000.
Is that are those numbers closer can you give us an idea yes I can.
Give you I can give you the numbers Po.
So yes.
Actually in my prepared.
Remarks earlier in the call I did also mention what the chartering cost is for the first quarter.
Mads Boye Petersen: Great, thank you, Mark. On the first quarter partial fixtures, sequentially, it's almost flat, where typically you'd expect it to be down with the first quarter being a seasonally slow quarter. Is that primarily the Panama Canal, or there are other things in there that's giving you what really looks like a seasonally strong, I mean, a strong, seasonally slow first quarter. Yeah, hi Liam, it's Mads
Sort of booked in <unk>.
Incurred so far so you have that as well.
But for the fourth quarter, the chartering costs was $17986 per day.
The charter in days were each approximately 1800 charter in days.
Okay, Great and then looking forward.
Mads Boye Petersen: The Panama Canal, of course, has an effect, but I think the main driver is also the fact that we were able to book cargo in Q4 that we are now executing on in Q1 at what are historical, pretty attractive levels. So, of course, it's a result of the general strengthening, but also the fact that we were able to secure some pretty decent pay for the public. Great. Thank you, Mads. Thank you, Mark. Thank you, Gianni.
Chartered in cost of 1300 days at 17100.
How many can you give me my appreciation for sort of how the.
Whole quarter might look like.
Well the chartered in days be close to what they were in the fourth quarter and the costs should be a little bit lower just because.
Maybe you can avoid that spike that you saw in December.
Charles Kennedy Fratt: Yep. Thanks, Liam. Thank you. Our next question comes from Poe Fratt with Alliance Global Partners. Please go ahead. Good morning, Mark. Good morning, Gianni.
Well, yes.
Close to the end of the quarter here. So I don't expect significant changes to what we said.
Right.
Youre right the fleet remains around.
Charles Kennedy Fratt: Good morning, Mads. Good to see you on Monday. Hey, can we just dig a little deeper on the charter hire expense? It was, you know, roughly $34 million for the quarter. Do you have I'm calculating that your charter in days were about 17, and I'm calculating a charter in expense in the fourth quarter of just over $19,000. Is that, are those numbers close, or can you give us an idea? Oh yeah, I can give you the numbers. I can give you the, the numbers, Po. That'd be great.
We're still around 45 to 50 vessels.
Q4, we had about 44 total fleet.
So yes.
Yes, I think.
As far as volume of activity, it's relatively similar and then since we are pretty close to the end I think the numbers that we gave there.
A very good indication of what it will be for the full quarter.
Okay, Great and then Matt.
Or I guess another thing I just covered.
Do you have.
For the rest of the year.
Are you can you give me an idea of sort of how you are.
Ford covered looks for the rest of the year and then your chartered in costs.
Are you willing to sort of look.
Gianni Del Signore: So, yes, and actually, in my prepared remarks earlier in the call, I did also mention what the chartering cost is for the first quarter, what we've sort of booked and encouraged so far. So you have that as well. But for the fourth quarter, the chartering cost was $17,986 per day, and the chartering days were approximately 1800. Okay, great. And then, you know, looking at Ford, you know, charted in the cost of 1300 days at 17,100. How many can you give me an appreciation for sort of how the whole quarter might look? Will the chartered-in days be close to what they were in the fourth quarter? And the cost should be a little bit lower just because... Maybe you can avoid that spike that you saw in December?
Look beyond just this quarter.
Okay.
The exact date and time.
Yeah.
So we don't we don't give out beyond.
The first quarter, but.
As far as our core business.
The sort of.
Core contract that we're operating in our typical.
Long term cover.
We discussed our long term cover on our own fleet.
It remains the same.
But in the near term.
We're always booking forward into subsequent quarters in the market.
Yes.
It is always changing but we havent really we havent, we havent given out those dose longer term other than other than our long term numbers.
On our long term contracts.
And in terms of the chartered in fleet.
Our approach and strategy around that.
The vast majority of that is short term in nature.
<unk> re price.
Relatively quickly.
Okay.
Significant.
Gianni Del Signore: Well, we're pretty close to the end of the quarter here, so I don't expect significant changes to what we said. But, you know, you're right, the fleet remains around. We're still around 45 to 50 vessels. In Q4, we had about 44 total vessels. So, Yeah, I think. As far as the volume of activity goes, it's relatively similar, and since we are pretty close to the end, I think the numbers that we gave there are, you know, a very good indication of what they will be for the full quarter. Okay, great. And then Mads, or I guess another thing I just support coverage.
The charter in tonnage over a longer period places that's not part of the strategy.
Yes, you sort of wanted to avoid taking market that.
And then what your own fleet right <unk>, you don't want to charter in long term and get exposed.
Negative moves in the market.
Yes, 100% correct right I mean, the chartered in fleet for Us is.
Essentially an arbitrage around the own fleet on our way to employ the entire fleet of the company in a more subtle sensible way rather than ending up better.
I think so far should pick up a cargo just because you don't want to fixing a ship so.
Goes back to what Mark said earlier that you sort of have to look at the whole.
Not just pick out the opposite.
Unknown Executive: I mean, do you have, for the rest of the year, are you, can you give me an idea of sort of how Forward-covered looks for the rest of the year and then your charter bin costs? Are you willing to, you know, sort of look beyond just this quarter? For this, you know, exact date and time. So we don't we don't give out beyond the first quarter.
I will then discuss it serves.
The purpose and the greater picture of things.
Like this you can have.
Have a quota.
And that.
Particular part of the business.
A little disruptive as Mark says.
Yes.
I know that hasnt been sort of talking about your Ford covered but.
Has anything changed where you typically have.
10 to 12, working 10 to 12.
Unknown Executive: But, you know, as far as our core business, you know, the sort of core contract that we're operating in our typical long-term cover. We discussed our long-term cover on our own fleet, and it remains the same. But in the near term, you know, we're always booking forward into subsequent quarters, you know, and the market is, is always changing. But we haven't really, we haven't given out those longer-term numbers other than other than our long-term numbers on our long-term contracts.
Ice class vessels working during the ice season over the course of.
Call it the summer and early fall.
Yes, that's part of the fleet is owned.
Primarily so so we don't expect any changes in that part of the part of the fleet no.
But if we have booked other business that those shifts.
Leave to go north into the Arctic we may it is a more active part of it.
The season for us that that third quarter, not just because the ships go north.
Then we have to replace it takes some ships from the market to participate in movie cargoes that we book, we probably have a little higher chartered in fleet during that period.
Mads Boye Petersen: And in terms of the Chartered In Fleet Poll, you know, our approach to strategy around that hasn't really changed. The vast majority of that is short-term in nature, so that will always fluctuate. Relatively quickly. We're not looking to, you know, add up a significant amount of child insurance over a longer period, for instance. That's not part of the strategy. Yeah, you sort of want to avoid taking market bets other than with your, you know, own fleet. Right, Mads?
Okay, and then Matt or you assume anything on the demand side.
Ranges either positive or negative that you can highlight for the rest of the year.
I think I want to point to.
Cindy.
And in my written comments.
We are seeing.
Increased demands in the businesses and illustrates why we are pretty busy such as construction material that is not just across the ships, we own or operate but also in our terminals business.
Mads Boye Petersen: You don't want to charter for the long term and get exposed to negative moves in the market. Yeah, 100% correct, right? I mean, the chartered-in fleet for us is essentially an arbitrage around the own fleet and a way to employ the entire fleet of the company in a more sort of sensible way rather than ending up, you know, ballasting too far to pick up a cargo just because you don't want to fix in a ship. So it goes back to what Mark said earlier that you sort of have to look at the whole, not just pick out the chartered ones because it serves a purpose in the greater picture of things where, in a quarter like this, you can have a quarter that's just in there.
So we feel pretty confident about the demand going forward than those in those commodities.
But we're not.
Long haul iron ore.
Owner operator so.
Inc.
I read the same data you do and I think demand wise things look pretty good not fantastic, but okay and that combined with the.
Attractive attractive supply side, we feel we feel pretty confident about where the market is on Wednesday.
Okay, and then you talked about.
You talked about the Terminalling business.
Yeah.
Susan.
A sequential drop in revenues there margins were still healthy but let's.
Mads Boye Petersen: I know that you're hesitant to sort of talk about your forward cover book, but has anything changed where you typically have, you know, 10 to 12 working, 10 to 12, Ice Class Fest was working during the ice season over the course of, you know, called the summer and early fall. Yeah, that part of the fleet is owned primarily, so we don't expect any huge changes in that part of the fleet, no. But if we have booked other business, that those ships now have to leave to go north into the Arctic, we may, it is a more active part of the season for us, that third quarter. Not just because the ships go north, but because then we have to replace, take some ships from the market to participate in moving cargoes that we booked, we probably have a little higher chartered in the fleet during that time.
Seasonal drop.
The sequential drop in revenue in the stevedoring terminally is that seasonal and we should expect a pickup in this quarter and the rest of the year into the fourth quarter can you just give me an idea of sort of the cadence of that business.
It depends it depends on on.
On demand.
Ships coming into our terminals so.
I don't think that decrease was was that.
Yeah.
Hi that much.
It could be affected by that.
Could be affected by the number of ships that come into port during that quarter.
We.
Our most active port is port Everglades and there we have.
We do container ships, we do we load salaries, we we discharge dry bulk goods.
Mads Boye Petersen: Okay. And then, Mads, are you seeing anything on the demand side, changes either, you know, positive or negative, that you can highlight for the rest of the year? I think I want to point to what was in Mark's written comments that we are seeing. Unknown Executive, Pangaea. So we feel pretty confident about the demand that's going forward there for those commodities. I mean, you know, but we're not a big sort of... a long haul iron ore owner and operator.
<unk> that come in so it really depends on the schedule.
Those of those ships that are visiting.
The ports.
We do have some.
More active things happening in some of the other ports. So so things should should move up this year Paul.
The port Everglades business.
It is new to us from last.
June and.
So I think in the beginning you will see a little bit of.
Ups and downs, but not significant they have been fairly steady.
Mads Boye Petersen: So there, I think, you know, I read the same data that you do, and I think demand wise, things look pretty good, not fantastic, but okay. And that, combined with an attractive, attractive supply side, we feel pretty confident about where the market is and where it's heading.
Okay, and then G&A, if you could just highlight where that million dollars transit fee.
What part of that.
Expense line did come in with it and voyage expenses or or charter hire.
I know, it's nitpicky, but I just wanted to sort of understand where that was recognized.
Yes. It was it was recognized through voyage expenses, which obviously impacted our overall TCE.
Mads Boye Petersen: Okay. And then you talked about the terminaling business. There was a sequential drop in revenues there. You know, margins were still healthy, but there was a seasonal drop or a sequential drop in revenue at the Steven Dorey terminaling. Is that seasonal, and should we expect it to pick up in this quarter and the rest of the year into the fourth quarter? Or can you just give me an idea of sort of the cadence of that business? It depends.
And.
I think I think we spoke about this on our last call regarding the situation of the Panama Canal and Unfortunately, we were there and we had to bid on a slot to get through them.
It was a $1 million impact.
Voyage expenses and reduction.
Movement reduction in TCE and adjusted EBITDA.
So yes it is.
Mark L. Filanowski: It depends on demand coming into our terminals. So I don't think the decrease was that much could be affected by the number of ships that come into port during that quarter. Our most active port is Port Everglades, and there we handle container ships, we load ferries, we discharge dry bulk goods, commodities that come in.
Where it is it's recognized great.
Great. Thanks, a lot very helpful.
Have a great day.
Thanks, Bob.
As a reminder, if you would like to ask a question. Please press star one at this time.
Yes.
And at this time I show no further questions in queue. I'll go ahead, and turn the call back to Mark <unk> for any additional or closing remarks.
Mark L. Filanowski: So it really depends on the schedule of those ships that are visiting the port. We do have some more active things happening in some of the other ports, so things should move up this year, Paul. The Port Everglades business is new to us this year.
Thank you for joining us today.
For our call and see you next quarter.
This does conclude today's call. We thank you for your participation you may disconnect at any time.
Mark L. Filanowski: June. And so I think in the beginning, you'll see a little bit of ups and downs, but not significant. They've been fairly steady.
Okay.
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Gianni Del Signore: Okay, and then Gianni, if you could just highlight where that million dollar transit Fee, you know, what part of the expense line did it come in? Was it in voyage expense or charter hire? I know it's nitpicky, but I just wanted to sort of understand where that was recognized.
Hum.
Hum.
Uh huh.
Yeah.
Sure.
Okay.
Okay.
[music].
Gianni Del Signore: Yeah, it was recognized through voyage expenses, which obviously impacted our overall TCE. And, you know, I think we spoke about this in our last call regarding the situation in the Panama Canal. And unfortunately, we, you know, we were there, and we had to bid on a slot to get through, and it was a million dollar impact on voyage expenses and an equivalent reduction in TCE and adjusted EBITDA.
Alright.
[music].
Gianni Del Signore: So yeah, that's where it is. It's recognized. Great. Thanks a lot. Very helpful. Have a great day.
Charles Kennedy Fratt: Thanks, Bill. As a reminder, if you would like to ask a question, please press star one at this time. And at this time, I have no further questions in queue.
Okay.
[music].
Tom.
[music].
Mark L. Filanowski: I'll go ahead and turn the call back to Mark Filanowski for any additional or closing remarks. Thank you for joining us today for our call, and see you next quarter. This does conclude today's call. We thank you for your participation. You may disconnect at any time.
Okay.
[music].
Hum.
Yes.
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Operator: Hi, Welcome to Summersculptingiya, MEEEEEEEEEEEEEE ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? and John Carter, and Mark Williams. Directed by Produced by, Well, that's all for now. Page 9 of 9
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