Q2 2024 Pangaea Logistics Solutions Ltd Earnings Call

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Savannah: Good morning, my name is Savannah. I will be your operator today. I would like to welcome everyone to the Pangaea Logistics Solution second quarter 2024 earnings teleconference. Today's call is being recorded and will be available for replay beginning at 11 a.m. Eastern. The recording can be accessed by dialing 800-938-2378, domestic, or 402-220-1129, international.

Speaker Change: [inaudible]

Savannah: Good morning. My name is Savannah. I will be your conference operator today. At this time, I would like to welcome everyone to the Pangaea Logistics Solutions Second Quarter 2024 Earnings Teleconference.

Speaker Change: Today's call is being recorded and will be available for replay beginning at 11 a.m. Eastern. The recording can be accessed by dialing 800-938-2378, domestic, or 402-220-1129, international.

Savannah: 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 one on your phone. If your question has been answered, you may remove yourself from the queue at any time by pressing star 2. We do ask that you please pick up your handset for optimal sound quality. It is now my pleasure to turn the floor over to Stefan Neely of Bellum Advisors.

Speaker Change: 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 phone. If your question has been answered, you may remove yourself from the queue at any time by pressing star 2.

Speaker Change: We do ask that you please pick up your handset for optimal sound quality.

Speaker Change: It is now my pleasure to turn the floor over to Stefan Neely with Bellum Advisors. Please go ahead.

Stefan Neely: Thank you, operator. And welcome to the Pangaea Logistics Solutions second quarter 2024 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 includes 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 those described in our periodic reports filed with the SEC.

Stefan Neely: Thank you, Operator, and welcome to the Pangaea Logistics Solutions second quarter 2024 results conference call. Leading the call with me today is CEO Mark Filanowski, Chief Financial Officer Gianni Del Signore, and COO Mads Petersen.

Speaker Change: Today's discussion contains forward-looking statements about future business and financial expectations.

Speaker Change: 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.

Stefan Neely: Except as required by law, we undertake no obligation to update our forward-looking statement. 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.

Speaker Change: accept as required by law, we undertake no obligation to update our forward looking statements. 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.

Mark Filanowski: Thank you, Stefan, and welcome to those joining us on the call today. After the market closed yesterday, we issued a release detailing our second quarter 2024 results. Our results for the quarter represent consistent execution of our cargo-focused business model amid a seasonably stable period for the dry bulk market. While the second quarter is typically one of our softer quarters in terms of demand, our fleet was well utilized on cargo contracts with key customers on Atlantic trade routes.

Mark: Thank you, Stefan, and welcome to those joining us on the call today.

Mark: After the market closed yesterday, we issued a release detailing our second quarter 2024 results. Our results for the quarter represent consistent execution of our cargo-focused business model amid a seasonably stable period for the dry bulk market.

Mark: While the second quarter is typically one of our softer quarters in terms of demand, our fleet was well utilized on cargo contracts with key customers in Atlantic trade routes.

Mark Filanowski: Our strong utilization and consistent execution resulted in earned TCE rates exceeding the benchmark index by 7%. We reported adjusted net income of $4.6 million for the second quarter and adjusted EBITDA of $15.9 million. Our adjusted EBITDA was about flat with the second quarter of last year.

Mark: Our strong utilization and consistent execution resulted in earned TCE rates exceeding the benchmark index by 7%.

Mark: We reported adjusted net income of $4.6 million for the second quarter and adjusted EBITDA of $15.9 million.

Mark: Our adjusted EBITDA was about flat with the second quarter of last year.

Mark Filanowski: As our achieved TCE rates improved 4% year over year, but were offset by higher charter and vessel operating expenses. At a macro level, global demand for dry bulk remains strong and has proven to be resilient in the face of ongoing political disruption and bottlenecks in key trade routes. Nonetheless, the overall supply of new build vessels remains constrained, which we believe will continue to put upward pressure on dry bulk rates in the near and intermediate term.

Mark: As our achieved TCE rates improved 4% year over year, but were offset by higher charter and vessel operating expenses.

Mark: At a macro level, the global demand for dry bulk remains strong and has proven to be resilient in the face of ongoing political disruption and bottlenecks in key trade routes.

Mark: Nonetheless, the overall supply of new build vessels remains constrained, which we believe will continue to put upward pressure on dry bulk rates in the near and intermediate term.

Mark Filanowski: The second half of the year represents a seasonal peak for our business due to heightened demand within our niche Arctic trade route. Combined with our differentiated cargo focus business model, we are well positioned to continue delivering consistent premium TCE returns relative to the prevailing market, while also navigating any potential market volatility.

Mark: The second half of the year represents a seasonal peak for our business due to heightened demand within our niche Arctic trade routes.

Mark: Combined with our differentiated cargo focus business model, we are well positioned to continue delivering consistent premium TCE returns relative to the prevailing market, while also navigating any potential market volatility.

Mark: While certain parts of the market have been under pressure since the end of the second quarter, we are seeing strong demand as the Arctic trade season begins to accelerate.

Mark Filanowski: We are seeing strong demand as the Arctic trade season begins to accelerate. Through today, we've booked over 3,298 shipping days at an average TCE rate of $17,978 per day. Strategically, we were very focused on capital allocation during the second quarter, continuing to fortify our balance sheet and opportunistically build our fleet of owned vessels. As we announced last quarter, we expanded our owned operating fleet of vessels by entering into an agreement to purchase two 58,000 deadweight ton sister ships built in 2016 for a total consideration of $56.6 million.

Mark: Through today, we've booked over 3,298 shipping days at an average TCE rate of $17,978 per day.

Mark: Strategically, we were very focused on capital allocation during the second quarter.

Mark: Continuing to fortify our balance sheet and opportunistically build our fleet of owned vessels.

Mark: As we announced last quarter, we expanded our owned operating fleet of vessels by entering into an agreement to purchase two 58,000 deadweight ton sister ships built in 2016 for total consideration of $56.6 million.

Mark Filanowski: We took delivery of the first of these two ships, the bulk Brenton, in late July, and we will receive the bulk Patience next week. Gianni will provide more specifics on our balance sheet here shortly, but I'm happy to report we arranged financing for these two ships and refinanced balloon payments with a new $50 million credit facility with DNB Bank, another strong capital partner in our lending portfolio. During the quarter, our Terminal and Stevedore business delivered its highest level of profitability since we acquired the business in June of last year.

Mark: We took delivery of the first of these two ships, the Bulk Brenton, in late July , and we will receive the Bulk Patience next week.

Mark: Gianni will provide more specifics around our balance sheet here shortly, but I am happy to report we arranged financing for these two ships and refinanced balloon payments

Gianni: with a new $50 million credit facility with DNB Bank, another strong capital partner to our lending portfolio.

Gianni: During the quarter, our Terminal and Stevedore business delivered its highest level of profitability since we acquired the business in June of last year. We continue to focus on building out this segment with our Port of Tampa activity scheduled to begin expanded production in the second half of 2025.

Mark Filanowski: We continue to focus on building out this segment, with our Port of Tampa activity scheduled to begin expanded production in the second half of 2025. As we enter the peak demand season for our business in the second half of the year, we are well positioned to weather market volatility and deliver consistent return premiums over the prevailing market. Over the longer term, our cargo-focused business model, expanded fleet of vessels, and strategic presence in niche trade routes will enable us to continue delivering above-market returns, while our lean balance sheet supports our ability to utilize opportunistic growth capital and provide our shareholders with a consistent dividend program. With that, I'll turn it over to Gianni for further discussion of our second quarter results.

Gianni: As we enter the peak demand season for our business in the second half of the year, we are well positioned to weather market volatility and deliver consistent return premiums over the prevailing market.

Gianni: Over the longer term, our cargo-focused business model

Gianni: Expanded fleet of vessels and strategic presence in niche trade routes will enable us to continue delivering above market returns, while our lean balance sheet supports our ability to utilize opportunistic growth capital investment and provide our shareholders with a consistent dividend program.

Gianni: With that, I'll turn it over to Gianni for further discussion of our second quarter results.

Gianni Del Signore: Thank you, Mark, and welcome to all of those joining us today. Our second quarter financial results are highlighted by continued premium TCE returns and strong operating cash flow generation. Second quarter TCE rates were approximately $16,223 per day, a premium of approximately 7% over the average published market rates for Supermax and Panamax vessels in the period, which is supported by strong demand within our key Atlantic trade routes and our contracts for freightment, which locked in rates for cargo performance. Our adjusted EBITDA for the quarter was flat compared to the prior year at $15.9 million.

Gianni Del Signore: Our adjusted EBITDA margin decreased 137 basis points to 12.1%, as higher charter hire and vessel operating expenses offset higher market rates and growth in total shipping days year over year. Our total charter hire expense increased by 12% when compared to the second quarter of 2023 due to a 3% increase in total chartered days and a 45% increase in the prevailing market rates for Panamax and Supermax vessels. Our chartering cost on a per-day basis was $16,583 per day in the second quarter of 2024.

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

Gianni: Our second quarter financial results are highlighted by continued premium TCE returns and strong operating cash flow generation.

Gianni: Second quarter TCE rates were approximately $16,223 per day.

Speaker Change: A premium of approximately 7% over the average published market rates.

Speaker Change: for Supermax and Panamax festivals in the period.

Speaker Change: which is supported by strong demand within our key Atlantic trade routes.

Speaker Change: and our Contracts for Freightment, which locked in rates for cargo performance.

Speaker Change: Our adjusted EBITDA for the quarter was flat compared to the prior year at $15.9 million.

Speaker Change: Our adjusted EBITDA margin decreased 137 basis points to 12.1%, as higher charter hire and vessel operating expenses offset higher market rates and growth in total shipping days year over year.

Speaker Change: Our total charter hire expense increased by 12% when compared to the second quarter of 2023, due to a 3% increase in total chartered-in days and a 45% increase in the prevailing market rates for Panamax and Supermax vessels.

Speaker Change: Our chartering cost on a per-day basis was $16,583 per day in the second quarter of 2024. And through today, we've booked approximately 1,674 days at $14,505 per day for the third quarter.

Gianni Del Signore: And through today, we've booked approximately 1,674 days at $14,505 per day for the third quarter. Vessel operating expenses net of technical management fees increased by 13% year-over-year from an average of $5,517 per day last year to $6,246 per day in the second quarter of 24. The increase in expenses per day was primarily driven by timing of expenses incurred in the second quarter of 2024 versus 2023. However, for the six-month period ended June 30,

Speaker Change: Vessel operating expenses net of technical management fees increased by 13% year over year, from an average of $5,517 per day last year to $6,246 per day in the second quarter of 24.

Speaker Change: The increase in expenses per day was primarily driven by timing of expenses incurred in the second quarter of 2024 versus 2023.

Gianni Del Signore: Vessel operating expenses net of technical management fees increased by only 3.5 percent from $5,575 to $5,773 per day. In total, our reported gap net income attributable to Pangaea for the second quarter was $3.7 million, or $0.08 per diluted share, compared to $2.8 million, or $0.06 per diluted share, in the second quarter of last year. When excluding the impact of the unrealized loss from derivative instruments, as well as other non-GAAP adjustments, our reported adjusted debt income attributable to Pangaea during the quarter was $4.6 million, or $0.10 per diluted share, which was flat when compared to the second quarter of 2023. Moving on to the cash flows, total cash from operations increased by 6.9 million year-over-year to approximately $9 million as stable profitability was bolstered by improved cash generation from net working capital.

Speaker Change: However, for the six-month period ended June 30, vessel operating expenses net of technical management fees increased by only 3.5 percent from $5,575 to $5,773 per day.

Speaker Change: In total, our reported gap net income attributable to Pangaea for the second quarter was $3.7 million, or $0.08 per diluted share, compared to $2.8 million, or $0.06 per diluted share in the second quarter of last year.

Speaker Change: When excluding the impact of the unrealized loss from derivative instruments, as well as other non-GAAP adjustments, our reported adjusted debt income attributable to Pangaea during the quarter was $4.6 million, or $0.10 per diluted share, which was flat when compared to the second quarter of 2023.

Speaker Change: Moving on to the cash flows, total cash from operations increased by 6.9 million EUR over year to approximately 9 million dollars as stable profitability was bolstered by improved cash generation by net working capital.

Gianni Del Signore: At quarter end, the company had 77.9 million in cash and total debt, including finance lease obligations, of approximately 253 million. As Mark mentioned earlier, the second quarter was an active one from a financing perspective as we paid off the final balloon payment on the Bulk Endurance, Bulk Pride, and Bulk Independence credit facilities of approximately $20 million. We subsequently entered into a new $50 million facility, which was initially utilized to refinance the Bulk Endurance for only $17.6 million.

Speaker Change: At quarter end, the company had $77.9 million in cash in total debt, including finance lease obligations of approximately $253 million.

Speaker Change: As Mark mentioned earlier, the second quarter was an active one from a financing perspective, as we paid off the final balloon payment on the Bulk Endurance, Bulk Pride, and Bulk Independence credit facility of approximately $20 million.

Mark: We subsequently entered into a new $50 million facility, which was initially utilized to refinance the bulk endurance only for $17.6 million.

Gianni Del Signore: The remaining capacity of this facility will be used for the delivery financing of the bulk Brenton, which was delivered in July, and the bulk patients, which will be delivered in August. The initial drawdown of $17.6 million is payable over five years with a balloon payment at maturity of $9.7 million and an interest rate based on three months' SOFR plus 250 basis point spread. Further, in July, we refinanced the bulk prudence with a new lender generating $15.2 million of cash payable over five years with a balloon payment at maturity of $8.6 million and an interest rate based on three months' SOFR plus a 190 basis point spread.

Mark: The remaining capacity of this facility will be used for the delivery financing of the bulk Brenton, which delivered in July , and the bulk Patience, which will be delivered in August .

Mark: The initial drawdown of $17.6 million is payable over five years with a balloon payment at maturity of $9.7 million and an interest rate based on three months SOFR plus 250 basis point spread.

Mark: Further, in July , we refinanced the bulk prudence with a new lender, generating $15.2 million of cash, payable over five years, with a balloon payment at maturity of $8.6 million, and an interest rate based on three months SOFR plus a 190 basis point spread.

Gianni Del Signore: On a pro forma basis, after the completion of these financings, our total debt to vessel book value is approximately 54%, which is flat when compared to the prior year period, and when adjusted for the fair market value of our vessels, it is approximately 43%. During the quarter, our overall interest expense remained flat relative to the prior year interest rates due to our fixed rate and cap rate debt, as well as benefits from interest-yielding deposits, which generated nearly $700,000 in interest income.

Mark: On a pro forma basis, after completion of these financings, our total debt to vessel book value is approximately 54%, which is flat when compared to the prior year period.

Mark: And when adjusted for fair market value of our vessels is approximately 43%.

Mark: During the quarter, our overall interest expense remained flat relative to the prior year interest rates due to our fixed rate and cap-to-rate debt, as well as benefits from interest-yielding deposits which generated nearly $700,000 in interest income.

Mark: At the end of the second quarter, the ratio of net debt to trailing 12-month adjusted EBITDA was 2.1 times.

Mark: In the near term, our capital allocation focus will be on maintaining our nimble balance sheet in order to continue opportunistic investments and growth through the expansion of our onshore footprint and owned vessel capacity.

Mark: We are also continuing to prioritize a consistent return of capital strategy as evidenced by our consistent dividends, which we believe can be sustained through all phases of the market cycle.

Gianni Del Signore: At the end of the second quarter, the ratio of net debt to trailing 12-month adjusted EBITDA was 2.1 times. In the near term, our capital allocation focus will be on maintaining our nimble balance sheet in order to continue opportunistic investments and growth through the expansion of our onshore footprint and owned vessel capacity. We are also continuing to prioritize a consistent return on capital strategy as evidenced by our consistent dividends, which we believe can be sustained through all phases of the market cycle. With that, we will now open the line to questions.

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

Savannah: Thank you. And at this time, if you would like to ask a question, please press star one on your telephone keypad. You may remove yourself from the queue at any time by pressing star two.

Speaker Change: Thank you and at this time if you would like to ask a question please press star 1 on your telephone keypad.

Speaker Change: You may remove yourself from the queue at any time by pressing star 2. And once again, that is star 1 to ask a question. Our first question will come from Liam Burke with B. Riley. Please go ahead. Thank you. Good morning, Mark. Good morning, Gianni. Good morning, Mads.

Liam Burke: Thank you. Good morning, Mark. Good morning, Gianni. Good morning, Mads. Hello, Liam.

Savannah: And once again, that is star number one to ask a question. Our first question will come from Liam Burke with B. Riley. Please go ahead. Thank you. Good morning.

Mark Filanowski: Mark, you just added two vessels. And on the fleet renewal program, you're balancing between chartered in and owned. Right now, the way you're looking at the market, depending on asset prices, would you be more inclined to stamp PAT, or would you add or subtract vessels here?

Mark: Hello, Liam.

Liam Burke: Mark, you just added two vessels. And on the fleet renewal program, you're balancing between chartered in and owned. Right now, the way you're looking at the market.

Liam Burke: Depending on asset prices, would you be more inclined to stand pat or would you add or subtract vessels here?

Mark Filanowski: I think we want to stand pat for just a little bit, Liam, see where the market's headed. We were, we've been looking for good ships for, you know, a while, maybe, maybe we could have watched the market move up in front of us. We were on a few ships late last year and early this year, and we were just behind the market a little bit. But we finally found a couple of ships that really fit our fleet nicely. So we were aggressively aggressive in getting those ships. And that satisfied us for a little while, I think, you know, not long term. But right now, I think we can take a breath.

Mark: I think we want to stand pat for just a little bit, Liam, see where the market's headed. We were, we've been looking for good ships for a while. Maybe, maybe we...

Liam Burke: We watched the market move up in front of us. We've been on a few ships late last year and early this year, and we were just behind the market a little bit, and we finally found a couple of ships.

Liam Burke: That really fit our fleet nicely, so we were aggressively aggressive in getting those ships, and that satisfied us for a little while, I think, you know, not long term, but right now I think we can take a breath.

Gianni Del Signore: Okay, thank you. Gianni, you still have vessels under finance leases. Is there any opportunity to refinance those to further take down your interest expense?

Liam Burke: Okay, thank you. Gianni, you still have vessels under finance leases. Is there any opportunity to refinance those to further take down your interest expense?

Gianni: Some of them, actually, one is coming due in September , Liam, and then others, I think we're pretty comfortable. And I gave that pro forma sort of...

Speaker Change: look at our our debt balances against our asset both from a book value and a fair value perspective. I think I think right now I you know we're

Gianni Del Signore: So I think that it still remains important to us to have that flexibility. And I think, where we look at our sort of total balance sheet, I think we're pretty comfortable. Not to say we won't attack that in the future, if it presents itself, but I think where we are right now and, ultimately, having that flexibility is still important. Good.

Speaker Change: We were fortunate to be able to be part of this.

Speaker Change: You know, flexible in our acquisition process both last year with the port acquisition and then this year with a couple of ships. So I think that that still remains important to us.

Speaker Change: Unknown Attendee, Gianni Signore, Unknown Attendee, Gianni

Speaker Change: I think ultimately having that flexibility I think is still important to us.

Savannah: Great. Thank you, Mark. Thank you, Gianni.

Speaker Change: Great. Thank you, Mark. Thank you, Gianni.

Poe Fratt: Again, that is star number one. If you would like to ask a question, our next question will come from Poe Fratt with AGP.

Speaker Change: Yeah.

Speaker Change: And again that is star one if you would like to ask a question. Our next question will come from Poe Fratt with AGP. Please go ahead.

Poe Fratt: Hey, good morning. The method question I have is, you know, I'm a little, um, highlighting in your presentation that you talked about Arctic Trade Accelerating. And I'm just wondering whether that's any different from previous years when you typically see an upturn, you know, in activity and Arctic in the third quarter, or if there's something different happening this year.

Poe Fratt: Hey, good morning. The macro question I have is, you know, I'm a little, a little, I'm just highlighting in your presentation.

Poe Fratt: You know, you talked about the Arctic trade accelerating.

Poe Fratt: And I'm just wondering whether that's any different than previous years, when you typically see an upturn, you know, in activity in the third quarter, or is there something different happening this year?

Mads Petersen: I think the difference pro is mainly an earlier start than we've had in previous years. I think that was what we were referring to there. The fleet of our class ships is fully committed to that trade for Q3 and a little longer than that. So, yeah.

Speaker Change: Yeah, I think the Difference Pro is mainly an earlier start.

Speaker Change: Unknown Attendee, Gianni Signore, Unknown Attendee, Stefan Neely, Unknown Attendee, Gianni Signore,

Poe Fratt: Does that mean that it's going to end earlier? Is it a finite timeframe? Or is that just a benefit this year that you're getting?

Speaker Change: Does that mean Mads did a little end earlier, is it a finite time frame or is that just a benefit this year that you'll see?

Mads Petersen: I think it's a little bit too early to say, you know. It's obviously dependent on, you know, the ice conditions up there at the end of October, right? But we certainly expect to have the same amount of business there this year. The timing of it might move a little bit.

Speaker Change: I think it's a little bit too early to say. It's obviously dependent on the ice conditions.

Speaker Change: Up there in the end of October , right? But we certainly expect to have the same amount of business there this year. The timing of it might move a little bit.

Poe Fratt: Okay, and then in the same sentence or section, you say that market rates are mixed. Can you just expand on that comment?

Speaker Change: Okay, and then in the same sentence or the same section, you say that market rates are mixed. Can you just expand on that comment?

Mads Petersen: Yeah, I think it's I think if you look at the overall market for the quarter, it's been, it's sort of been remarkably stable. But individual pockets of the market. So geographical regions still have volatility, right? So I think when the quarter started, the Pacific was trading higher than the Atlantic, which is sort of an anomaly if you look at it in the longer view. That trend has sort of reversed in the last couple of months, so it is back to something that reflects the normal situation. So that's what we're referring to here.

Speaker Change: Yeah, I think if you look at the overall market for the quarter, it's sort of been remarkably stable. But individual pockets of the market, so geographical regions, still have volatility, right?

Speaker Change: I think when the quarter started, the Pacific was trading higher than the Atlantic, which is sort of an anomaly if you look at it in the longer view. That trend has sort of reversed in the last couple of months, so back to something.

Speaker Change: That reflects the normal situation. So that's what what is what we're referring to that

Poe Fratt: Okay, and are you seeing any change in demand? There's a lot of concern about just the, you know, the macro, you know, economic picture out there. Any change in demand that you're seeing from your customers at this point?

Speaker Change: Okay, and are you seeing, Mads, any change in demand? There's a lot of concern about just the, you know, the macro, you know, economic picture out there. Any change in demand that you're seeing from your customers at this point in time?

Mads Petersen: I think our customers in our trades are still pretty optimistic, you know, in our Atlantic trade for sure around, you know, construction materials, cement, and aggregate and that stuff. Thank you very much.

Matt: I think our customers in our trades are still still pretty optimistic and you know in in our Atlantic trade for sure around you know construction materials cement and aggregate and that stuff

Simon Metallix: Same on metallics, you know pretty optimistic still and I think you know macro sort of overall demand is up quarter on quarter compared to last year right so for reasons that also have to do with sort of the the trade-in disruptions that we have talked about before I think so

Poe Fratt: Sounds good. And then Mark, when you look at the overall, you know, fleet expanding to 26, is that anyone have any questions or comments?

Speaker Change: Um, yeah.

Speaker Change: Sounds good. And then, Mark, when you look at the overall, you know, fleet, expanding to 26, is that...

Mark: sort of something we should look at stability going forward. Or do you is there, you know, potential opportunities to sell some older sold some improved aged profile.

Mark Filanowski: We're constantly looking at the fleet and ways to, you know, maintain the average age pose. So, so I think you'll see us over time. Unknown Attendee, Gianni Signore, Mark Filanowski, Gianni Signore, Mads Petersen, Pangaea

Mark: sell off some older ships and add newer ships. Of course, we do have an appetite to grow the fleet as well, so we're looking for opportunities to do that in the right way at the right time.

Mark Filanowski: in the right way at the right time.

Gianni Del Signore: Okay. And then, Gianni, on the refinancing and just the financing front, you know, the prudence, I think, with refinanced and... It looked like you paid down, you know, about 4.6 million of one of the facilities. Could you highlight which facility that 4.6 million came out of? [inaudible]

Mark: Okay. And then, Gianni, on the refinancing and just the financing front, you know, the prudence, I think, with refinanced and...

Gianni Signore: It looked like you paid down, you know, about $4.6 million of one of the facilities. Could you highlight which facility that $4.6 million came out of?

Gianni Del Signore: Yeah, we had the balloon, the final maturity on the bulk endurance, bulk pride, and bulk independence facility that came due in May, within the quarter, right around the end of May. We subsequently took only the endurance, and we refinanced her. So the balloon payment was around $21 million, and we refinanced the endurance for about $17 million and kept the pride and the independence debt-free as of today. So that was in reference to that transaction.

Speaker Change: Yeah, we had the balloon, the final maturity on the bulk endurance, bulk pride and bulk independence facility that came due in May.

Speaker Change: Within the quarter, right around the end of May, we subsequently took only the endurance and we refinanced her. So the balloon payment was around $21 million and we refinanced the endurance for about $17 million.

Speaker Change: and kept the pride and the independence.

Speaker Change: debt-free

Gianni Del Signore: And then part of that transaction with the endurance basically was the first step in that $50 million facility we put together in the quarter, and that gave us a lot more sort of flexibility going into the year where we could acquire the Brenton and the Patience. So yeah, that debt reduction was part of that sort of transaction.

Speaker Change: as of as of today. So that was in reference to that transaction. And then part of part of that transaction with the endurance basically was the first step.

Speaker Change: and that $50 million facility we put together in the quarter, and that gave us a lot more sort of flexibility going into the year where we could acquire the Brenton and the Patience. So yeah, that debt reduction was just part of that sort of transaction.

Poe Fratt: Okay, and then, you know, the $50 million dollars in the secured facility, it looks like you've drawn down, you know, $32.8 million with the latest Nancy. Is that correct? And what would the remainder be used on? Is that because the direct, The So The...

Speaker Change: Okay, and then, you know, the $50 million dollars in the secured facility, it looks like you've drawn down $32.8 million with the latest financing.

Speaker Change: Is that correct, and what would the remainder be used on, is that to seduce the Britain?

Gianni Del Signore: So, the first tranche was the endurance at 17-6, and then the bulk Brenton delivered on July 26th, around delivered, and we used 15, around 15.6 million for the Brenton, and now the bulk patience is coming next week, August, between August 15th and August 20th, she's coming, and we'll use the balance of the facility for that. So, we basically, we added a little capacity to that facility so we could sort of have a somewhat of a hunting license to go out and acquire ships, but we were pretty quick to fill it, and after delivery of the patients, the facility is basically full.

Speaker Change: So the first tranche was the endurance.

Speaker Change: at 17-6, and then the bulk Brenton delivered on July , I think it was July 26th around, it delivered and we used.

Speaker Change: We used around $15.6 million for the Brenton.

Speaker Change: And now the book, Patience, is coming.

Speaker Change: Next week August between August 15th and August 20th. She's coming and we'll use the balance

Speaker Change: of the facility for that. So we're basically...

Speaker Change: We

Speaker Change: We added a little capacity right on that facility so we could sort of have a somewhat of a hunting license to go out and acquire ships, but we were pretty quick to fill it. And after the delivery of the patients, the facility is basically full.

Speaker Change: Unknown Attendee Okay.

Speaker Change: I guess I'm looking at the subsequent events in the 10-Q, and it references the 15.2 million

Speaker Change: Senior Security Turnpike was financed with bulk prudence.

Gianni Del Signore: Right, that was a separate, yep, that was a separate, okay, the boat prudence, correct, the boat prudence was a, it was a different facility, also closed late, no sorry, early in the third quarter, right around the second week of July, so a sub event for the, for the second quarter, but, but in our remarks just a few minutes ago, Paul, I do give sort of a pro forma after completion of all these financing, what is our balance sheet from a leverage perspective look like, from asset value, debt versus vessel asset value, and also, you know, we gave a comment about, from a fair market perspective as well, what we think, what we believe the leverage profile looks like as well, so that was, and those numbers are all after we complete these, these financing that we've, we've discussed as subsequent events.

Speaker Change: Right. That was a separate. Yep. That was a separate. Okay. The boat prudence.

Speaker Change: Correct. The ball prudence was a different facility, also closed.

Speaker Change: Late Sorry, early in the third quarter, right around the second week of July . So a sub event for the for the second quarter, but, but in our remarks just a few minutes ago, though, I do give

Speaker Change: sort of a pro forma after completion of all these

Speaker Change: Unknown Attendee, Gianni Signore, Unknown Attendee

Speaker Change: the leverage profile looks like as well. So that was and that those numbers are all after we complete these, these financings that we've we've discussed at subsequent events.

Poe Fratt: Gianni, if you have it handy, could you run through the Brenton, you know, how much you drew down, what the interest rate spread was, the amortization, and then the blue payment and the same with the patients, if you have that handy? Sure. Yeah, no, absolutely.

Speaker Change: Yep

Speaker Change: So Gianni, if you have it handy, can...

Speaker Change: Can you run through the Brenton, you know, how much you drew down, what the interest rate spread, the amortization, and then the bloom payment, and the same with patients, if you have that, Andy? Sure.

Gianni Del Signore: So the Brenton was a drawdown of $15.6 million. Um, and it's part of the facility. So it's a sofa plus two and a half, and it amortizes over five years to a balloon of about eight million. Okay, and then the prudence, I know that, will that be roughly the same? Prudence is actually quite, quite similar to that, the patients.

Gianni Signore: Yeah, no, absolutely. So the Brenton was a drawdown of $15.6 million.

Andy: And it's part of the facility so it's SOFR plus two and a half

Andy: and it amortizes over 5 years to a balloon of about 8 million.

Speaker Change: Okay, and then the prudence, I know that, will that be roughly the same?

Speaker Change: So that'll be the third week. Prudence is actually quite...

Speaker Change: Prudence is quite similar. I'm sorry, the patients. Patients will be very similar, correct. It falls into the same facility. It has the same five-year amortization. And the balloon will be very, very similar.

Poe Fratt: Okay, and so you're not going to actually fully draw down that 50 million; you'll have a little bit. We'll have a little bit of capacity, but obviously, we're not going to keep that capacity open. We'll cancel the remaining million or two million dollars that's there, and then we'll work with that bank on future deals, which is good. So we have another option at our disposal. And then can you just talk about the port, you know, the logistics business, you know, a really healthy increase in the third quarter.

Speaker Change: They're roughly the same.

Speaker Change: Okay, and so you're not going to actually fully draw down that $50 million, you'll have a little bit of...

Speaker Change: We'll have a... We'll have a...

Speaker Change: We'll have a little bit of capacity. Obviously, we're not going to keep that capacity open. We'll cancel the remaining million or $2 million that's there, and then we'll work with that bank on future deals, which is good. So we have another option at our disposal.

Poe Fratt: Is that seasonal? Or is it something that, you know, will continue into the fourth quarter and into 2025? And then what's the impact of the expansion in Port Everglades? And how much capital are you putting into that expansion?

Speaker Change: And then can you just talk about the Ford, you know, logistics business, you know, really healthy increase in the third quarter. Is that seasonal or is it something that

Speaker Change: will continue over into the fourth quarter and into 2025. And then what's the impact of the expansion in Port Everglades? And how much capital are you putting into that expansion?

Gianni Del Signore: So as far as as far as the margins in that business are concerned this year, we did, you know, we have the operation of Baltimore, which is pretty consistent, right? It's a monthly, it's a monthly sort of a fee that we're being paid to operate that port. And it's pretty consistent volume, but with Everglades, it can be lumpy. There are, you know, seasonal peaks.

Speaker Change: So as far as as far as the margins in that business is this

Speaker Change: Unknown Speaker Yeah, we did.

Speaker Change: You know, we have the operation in Baltimore, which is pretty consistent, right? It's a monthly...

Speaker Change: It's a monthly sort of a fee that we're being paid to operate that port and it's pretty consistent volume. But with Everglades, it can be lumpy. There are, you know, seasonal peaks.

Gianni Del Signore: In the second quarter, we did have some dry bulk vessels come to port, which do drive higher margins. So, and it was a decent, you know, decent volume in the second quarter, where we're, you know, we want to, we want to grow that business. And, and, and we're, you know, we're happy to see that there is, you know, some increasing volume there, but it's a focus for us. And we'll keep doing it. But it is a lumpy business, and it's seasonally driven. So, and then as far as the Mads will comment on the expansion, but the expansion.

Speaker Change: The second quarter we did have some dry bulk vessels come to port which do drive higher margins and it was decent volume through the second quarter. We want to grow that business.

Speaker Change: We're happy to see that there is some increasing volume there, but it's a focus for us and we'll keep doing it. But it is lumpy business and it's seasonally driven.

Gianni Del Signore: But the expansion, I just want to clarify.

Speaker Change: Mads will comment a bit on the expansion. The expansion, I just want to clarify, did you mean the Tampa expansion?

Poe Fratt: Yeah, I'm sorry, the one that hits in 2000, the second half of 25, I thought it was Port.

Max: Yeah, I'm sorry, the one that hits in 2000, the second half of 25, I thought it was poured out of the way.

Poe Fratt: I thought it had been pulled out of the way. No, that's at the Red Wing Terminal in Tampa. It is not something that is expected to be a big draw in our capital. I think we're, We have

Max: No, that's in the Red Wing Terminal in Tampa.

Max: It is not something that is expected to be a big draw on our capital.

Max: $3 to $3 to $5 million In terms of operating cost Jb partner, so it's a shared investment so we expect the operation to run in late Q3, 2020 Second half of the year

Gianni Del Signore: Yeah, so far in Tampa, what we do have and what you're seeing and maybe our financials is the ground lease. We've leased two acres of space at the port, and it ends up on our balance sheet as a right of use asset and a lease liability, a pretty small number, but that is the two-acre property that we're leasing there in Tampa.

Speaker Change: Yeah, so so far in Tampa, what we do have and what you're seeing in maybe in our financials is the ground lease

Speaker Change: We've leased two acres of space at the port.

Speaker Change: And it ends up on our balance sheet as a right of use asset and a lease liability. Pretty small number, but that is the two-acre property that we're leasing there in Tampa.

Poe Fratt: Great. Thanks for your time.

Speaker Change: Great. Thanks for your time.

Paul: Thanks, Paul.

Mark Filanowski: And that concludes today's question and answer session. I'd like to now turn the call back over to Mark Filanowski for closing comments.

Paul: And this will conclude today's question and answer session. I'd like to now turn the call back over to Mark Filanowski for closing comments.

Mark Filanowski: Thank you all for joining us on a summer Friday morning. Please enjoy the rest of your day. Thanks. Thanks again. And this will conclude today's...

Mark Filanowski: Thank you all for joining us on a summer Friday morning. Please enjoy the rest of your day. Thanks. Thanks again.

Savannah: And this will conclude today's conference. Thank you for your participation, and you may now disconnect.

Mark Filanowski: And this will conclude today's conference. Thank you for your participation and you may now disconnect.

Mark Filanowski: [inaudible]

Mark Filanowski: and Mark Filanowski. Thank you. Thank you.

Gianni Del Signore: Some of them are actually one is coming due in September, Liam, and then others. I think we're going to look at our debt balances against our assets, both from a book value and a fair value perspective. I think right now, you know. We were fortunate to be able to be, You know, flexible in our acquisition process both last year with the poor acquisition and then this year with a couple of ships.

Poe Fratt: Oh, patients, patients will be very similar. Correct. It falls into the same facility. It has the same five-year, five-year immunization, and the balloon will be very, very similar. Treat the plane so roughly, correct.

Poe Fratt: I guess I'm looking at the subsequent events in the 10-Q, and it references that the 15.2 million Senior Secure Termline was financed in bulk prudence.