Q3 2025 Pangaea Logistics Solutions Ltd Earnings Call
Speaker #3: To all sites on hold . We appreciate your patience . And we ask that you please continue to stand by .
Speaker #4: Please stand by . We're about to begin . Good morning . My name is Jamie , and I will be your conference operator today .
Speaker #4: At this time , I would like to welcome everyone to the Pangea Logistics Solutions . Third quarter 2025 Earnings Teleconference . Today's call is being recorded and will be available for replay beginning at 11 a.m.
Speaker #4: Eastern Standard Time . The recording can be accessed by dialing 880 395492 . For domestic or (402) 220-2551 for international . All lines are currently muted , and after the prepared remarks , there will be a live question and answer session .
Speaker #4: 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 two .
Speaker #4: 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 .
Speaker #4: Please go ahead .
Speaker #5: Thank you, operator, and welcome to the Pangaea Logistics Solutions third quarter 2020 results conference call. Leading the call with me today is CEO Mark Filanowski, Chief Financial Officer Gianni Signore, and COO Mads Peterson.
Speaker #5: 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 .
Speaker #5: Except 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.
Speaker #5: With that , I would like to turn the call over to Marc .
Speaker #6: Thank you , Stefan , and welcome to those joining us on the call today . We delivered strong third quarter results reflecting a seasonally active Arctic trading period and continued progress against our strategic priorities .
Speaker #6: The third quarter is typically our high water mark for the year . Giving Arctic activity . And this year was no exception . We delivered TCE rates that averaged 10% above the prevailing market for Panamax , Supramax and Handymax Handysize indices supported by our niche ice class capabilities and long term COAs .
Speaker #6: This outperformance occurred against the backdrop of a strengthening Drybulk market during the quarter , with the integration of the 15 Handysize vessels we acquired from SSI at the end of last year , shipping days increased by 22% year over year , resulting in adjusted EBITDA of 28.9 million , an increase of approximately 20% compared to last year .
Speaker #6: This underscores the leverage of our integrated model , along with our scale , as we maintain our cargo centric discipline . During the quarter , we further expanded our integrated service platform , which combines specialized shipping with terminal stevedoring and port services .
Speaker #6: This platform deepens customer relationships and enhances long term growth . We commenced operations at the Port of Pascagoula in Mississippi and at the Port of Aransas in Texas .
Speaker #6: In the fourth quarter . We will begin operations in Lake Charles , Louisiana . Expansion at the Port of Tampa , Florida is delayed a bit due to equipment deliveries , but we expect to begin operations early next year .
Speaker #6: We also continue to advance our fleet renewal strategy . During the quarter , we completed the sale of our strategic endeavor and last month entered into an agreement to sell the 2005 built Bulk Freedom for $9.6 million .
Speaker #6: These actions are consistent with our focus on improving fleet efficiency and emissions performance . As announced last quarter , we also completed the purchase of the remaining 49% stake in Cmaa management .
Speaker #6: Our technical operations platform in Athens , giving us giving us more control over technical management and further aligning operational performance with our commercial strategy .
Speaker #6: Additionally , we closed on the financing for strategic spirit and strategic vision totaling $18 million . These financings enhance balance sheet flexibility and provide additional capacity to support growth and working capital needs on capital allocation .
Speaker #6: We remain disciplined and continue to prioritize investing in our fleet and organic growth opportunities , maintaining a strong balance sheet and returning capital to investors through today .
Speaker #6: We have repurchased approximately 600,000 shares for a total of approximately $3 million . We also declared a five cent quarterly dividend consistent with our prior two quarters .
Speaker #6: We ended the quarter with approximately $94 million in unrestricted cash , supported by strong operating cash flow . Our balance sheet strength allows us to continue executing these priorities while navigating the current Drybulk environment .
Speaker #6: Broadly near-term Drybulk fundamentals remain constructive for our mix of minor bulks with normal seasonality expected as our Arctic activity tapers into quarter four .
Speaker #6: Resumed agricultural shipments from the US to China should support US Gulf markets and important region for US . Expected shipping demand for West Africa to China drybulk movements on larger ships will trickle down to smaller vessels .
Speaker #6: Limited effective supply growth and systematic regulatory constraints and confusion support a favorable medium term setup and are differentiated . Business model positions us well to deliver premium TCE returns through the cycle .
Speaker #6: Looking ahead to the fourth quarter of 2025 , broader Drybulk market pricing remains buoyant . As of today , we've booked 4210 shipping days for the fourth quarter , generating a TCE of $17,107 per day .
Speaker #6: Before I turn the call over to Johnny , I would like to take a moment on a personal note . As announced in September , I will retire as CEO and step down from the board effective January 1st , 2026 .
Speaker #6: It's been a privilege to serve as a chief executive officer of this company for the past four years , and to work alongside our talented and dedicated team .
Speaker #6: Together , we've grown Pangaea into a differentiated , cargo focused logistics platform . We've tripled the size of our own fleet and expanded our port and logistics operations to ten marine terminals across the US , Gulf and Mid-Atlantic .
Speaker #6: Since the passing of our founder editor , Cole , we have worked tirelessly to further his vision for the company and to position Pangea for sustainable long term growth .
Speaker #6: Ed was a real supply chain guy , always looking for solutions for his customers . I think he would be proud of what we've accomplished and the foundation we have built for the future .
Speaker #6: I have full confidence that Mads Pedersen , our current chief operating officer , is the right leader to take Pangea into its next chapter .
Speaker #6: Mads has over two decades of experience in the dry bulk industry and has been instrumental in shaping our strategy and operations over his 16-year tenure with Pangaea.
Speaker #6: His deep understanding of our business is relationships with our employees and our partners in all areas of our business , and his commitment to our strategy will serve customers and shareholders well .
Speaker #6: In closing , I'd like to thank our employees , customers and shareholders for your trust and partnership . It's been an honor to lead Pangea and look forward to watching the company continue to thrive under his leadership .
Speaker #6: With that , I'd like to turn the call over to Johnny to review our third quarter financial results .
Speaker #7: Thank you . Mark , and welcome to those joining us on the call today . Our third quarter financial results were highlighted by sustained TCE premiums relative to the prevailing market , supported by our niche Ice class fleet .
Speaker #7: During the peak of the Arctic trade season, third quarter TCE rates were $15,559 per day, a premium of approximately 10% over the average published market rates.
Speaker #7: For Panamax , Supramax , and Handysize vessels in the period . Our adjusted EBITDA for the third quarter was $28.9 million , an increase of $4.9 million relative to the prior year period , and adjusted EBITDA margin increased from 15.7% to 17.1% , reflecting a 22% increase in shipping days , with a 13% decrease in voyage expenses on a per day basis .
Speaker #7: Our total charter hire expenses decreased by 7%, primarily due to a 13% decrease in chartering days, somewhat offset by higher market rates.
Speaker #7: Our chartering costs on a per day basis was $15,387 in the third quarter of 2025 , an increase of approximately 6% year over year .
Speaker #7: Through today , we've booked approximately 1710 days at $16,537 per day for the fourth quarter of 2025 . Vessel operating expenses increased by approximately 57% year over year , primarily due to the acquisition of the SSI fleet , which increased total loan days by 61% on a per day basis .
Speaker #7: Vessel operating expenses , net of technical management fees , was $5,634 per day . Total general and administrative expenses increased by 64% from 6 million to approximately 9.8 million .
Speaker #7: The increase was primarily due to the consolidation of our technical management operations, the timing of recognition of incentive compensation year over year, as well as growth related to the SSI fleet acquisition.
Speaker #7: In total , our reported GAAP net income for the third quarter was $12.2 million , or $0.19 per diluted share , when excluding the impact of unrealized losses from derivative instruments as well as other non-GAAP adjustments .
Speaker #7: Are reported . Adjusted net income attributable to Pangea during the quarter was 11.2 million , or $0.17 per diluted share . Moving on to cash flows .
Speaker #7: Total cash from operations was approximately flat year over year at $28.6 million, driven by strong operating performance and cash generated from working capital at quarter-end.
Speaker #7: We had approximately $94 million in unrestricted cash . In total debt , including finance , lease obligations of approximately 386 million . During the quarter , our overall interest expense was 5.6 million , an increase of 1.7 million due to new debt .
Speaker #7: Facilities entered into during the third quarter , as well as the assumed debt and finance leases associated with the SSI acquisition . As Mark mentioned during the third quarter , we completed the financing of the strategic Spirit for $9 million , payable over seven years at an interest rate of sulfur plus 1.95% , and the strategic vision for $9 million payable over five years at an interest rate of sulfur plus 1.95% .
Speaker #7: The financing financings closed in July and September , respectively , and provided 18 million in cash that we intend to utilize for working capital and strategic investments .
Speaker #7: In addition , we continue to execute on our share repurchase program , buying back approximately 200,000 shares during the third quarter and an average price of $4.96 per share since quarter end .
Speaker #7: We've bought back an additional 200,000 shares , bringing our total to approximately 600,000 shares . Our buyback program complements our quarterly dividend policy , reinforcing our focus on delivering shareholder returns through a disciplined and balanced approach to capital allocation .
Speaker #7: Going forward , we will maintain the same disciplined approach to capital allocation . Our priorities remain clear preserve financial flexibility , deliver consistent returns to shareholders and invest selectively in opportunities that strengthen our integrated shipping and logistics platform .
Speaker #7: This includes advancing our terminal and stevedoring operations and continuing our fleet renewal strategy , with a focus on capital efficient initiatives . With that , we will now open the line for questions .
Speaker #4: Thank you . At this time , if you would like to ask a question , please press star One on your telephone keypad .
Speaker #4: If at any point your question has been answered , you may remove yourself from the queue by pressing star two . As a reminder , we do ask that you please pick up your handset for optimal sound quality .
Speaker #4: Once again , that is star one . To signal for a question and star two to remove yourself . We will pause for just a moment to allow questions to queue .
Speaker #4: We'll go first to Porat with AGP . Please go ahead .
Speaker #8: Hey good morning .
Speaker #6: Marco .
Speaker #8: Good morning . Mark Fairwind and following or fair season following winds . So congratulations on your on your retirement . You've been a steady .
Speaker #9: It was was it Richard Nixon who said Paul you're going to miss me . You won't have me to kick around anymore .
Speaker #8: Well I'm not sure I've been kicking you , but . So congratulations . And then , Madge , just . If you could , you know , you're not in the in the seat yet .
Speaker #8: But can you just highlight sort of a couple of your priorities ? Any changes that we might see ? You know , maybe give us their top three .
Speaker #8: Priorities going forward .
Speaker #10: Thank you Paul . Great question . I mean , definitely not looking at anything revolutionary here . Mark and I and and Johnny and Dan as well .
Speaker #10: And the rest of the team here . You know , we have worked on our strategy together . It's just never a one person project .
Speaker #10: So we just want to do essentially more of the same grow the platform the way it is now . So that is about the customers growing .
Speaker #10: The customer base , growing our logistics and ports and terminals offering . And then , you know , also over time , of course , when the when the opportunities present themselves want to grow , the number of ships in our fleet as well .
Speaker #10: So , you know , it's simply about execution for me . You know , there'll be of course , tweaks along the way .
Speaker #10: There always is . But for sure , nothing revolutionary . So it's about running the company , you know , efficiently . And then growing the platform as we go .
Speaker #8: Great . Thank you Matt , and then when you look out , you know your forward cover . I think you , you know , it's over 4000 days at 17,000 .
Speaker #8: You know, can you tell me what you think the premium to the index does in the fourth quarter? It compressed a little bit in the third quarter.
Speaker #8: I think probably just because of the Arctic trade. You know, set rates. And then also the market improved over the course of the quarter.
Speaker #8: So would you expect the premium to expand in the fourth quarter . And then also , you know , typically the third quarter is your highest high water mark for the year .
Speaker #8: But it doesn't look like that's going to be the case this year . It looks like fourth quarter is going to be higher than than the third quarter .
Speaker #8: Can you just talk about sort of the rate environment for the fourth quarter ?
Speaker #10: So , so , so I think in terms of the Arctic business , some of that actually extends a little bit into into Q4 for us .
Speaker #10: But it was, you know, Q3 is sort of developed in a way that is not uncommon for us when you are at the backdrop of a rising market, right?
Speaker #10: You know , the ships are all performing voyages that that have to be completed before they are repriced and additionally , we do have some shorter term cargo commitments that , that , that , that , you know , our margin contracts so that that's not that's not a normal in a rising market .
Speaker #10: I think Q4 is not done yet . We we haven't we haven't . You know , fixed all our exposure there . However , I do think that over time , the premiums will probably , you know , for sure the expectation is that they go towards some that that you normally see in our business in Q4 .
Speaker #8: Great . And then you sold another older supra . Can you sort of talk about your fleet renewal program in the context of , you know , asset values , even for older assets or , you know , holding up pretty well is 2026 going to be as active as 2025 as far as fleet renewal on the on the sales side .
Speaker #10: We'll have to see what what opportunities present themselves . You know , we have a pretty pragmatic approach to to to decisions around sales , right .
Speaker #10: We're we're looking at is the case for the for the freedom when when the ship is approaching 20 years old and the investments you have to do versus what you can replace that ship with .
Speaker #10: So, we're always looking at that. I think in terms of fleet renewal, we're always looking. I don't think we are necessarily deterred by the current market conditions in terms of values or the spot market, really.
Speaker #10: So I still think that especially in the Ultramax segment , there are opportunities . It's all about finding the right ones . We're a little bit picky when it comes to the ships that we want to bring into the fleet .
Speaker #10: But but you know , we we we for sure long term don't want to want to have a shrinking fleet , that's for sure .
Speaker #10: So so fleet renewal and to sort of keep a kind of status quo is , is is a must . And then the question after that is whether , you know , expansion is in the cards .
Speaker #8: Great . Thank you . And Mark , good luck . And congratulations , Matt .
Speaker #9: Thank you Paul .
Speaker #10: Thank you Paul .
Speaker #4: Once again , ladies and gentlemen , if you would like to signal for a question , simply press Star One on your telephone keypad .
Speaker #4: Again , that is star one , and we'll pause for just a moment . It appears that we have no further questions at this time .
Speaker #4: I'd like to turn the floor back over to Mark Filanowski for any additional or closing comments .
Speaker #9: Once again , thank you for joining our call . Should you have any questions , please feel free to contact us at .
Speaker #6: Investor . And a member of our team will follow up with you . This concludes our call today . You may now disconnect .
Speaker #4: Thank you once again , ladies and gentlemen . That will conclude today's event . Thank you for your participation . You may disconnect at this time and have a wonderful rest of your day .