Q4 2025 Pangaea Logistics Solutions Ltd Earnings Call

March 11, 2026

Speaker #3: Good morning. My name is Chelsea, 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 2025 results conference call.

Operator: Good morning. My name is Chelsea, and I will be your conference operator today. At this time, I would like to welcome everyone to the Pangaea Logistics Solutions Q4 and full year 2025 results conference call. Today's call is being recorded and will be available for replay beginning at 11:00 AM Eastern Standard Time. The recording can be accessed by dialing 800-839-5632 domestic or 402-220-2559 internationally. 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 telephone. If your question has been answered, you may remove yourself from the queue at any time by pressing star two.

Speaker #3: Today's call is being recorded and will be available for replay beginning at 11 o'clock AM Eastern Standard Time. The recording can be accessed by dialing 800-839-5632, domestic, or 402-220-2559, internationally.

Speaker #3: 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.

Speaker #3: 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.

Operator: 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 with Vallum Advisors. Please go ahead.

Speaker #3: It is now my pleasure to turn the floor over to Stefan Neely with Valum Advisors. Please go ahead.

Speaker #4: Thank you, operator, and welcome to the Pangaea Logistics Solutions fourth quarter and full year 2025 results conference call. Leading the call with me today are CEO Mads Petersen and Chief Financial Officer Gianni Del Signore.

Stefan Neely: Thank you, operator, and welcome to the Pangaea Logistics Solutions Q4 and full year 2025 results conference call. Leading the call with me today is CEO Mads Petersen and Chief Financial Officer Gianni Del Signore. 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 obligation to update our forward-looking statements. At the conclusion of our prepared remarks, we will open the line for questions. With that, I'd like to turn the call over to Mads.

Speaker #4: 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 #4: 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 #4: With that, I'd like to turn the call over to Mads.

Speaker #5: Thank you, Stefan, and welcome to those joining us on the call today. I'm excited to speak to you all on my first earnings call as CEO of Pangaea.

Mads Petersen: Thank you, Stefan, and welcome to those joining us on the call today. I'm excited to speak to you all on my first earnings call as CEO of Pangaea. On behalf of everyone at Pangaea, I want to extend our appreciation and gratitude to Mark Filanowski for his many years of leadership and for helping to facilitate a smooth transition. During my 16 years with the company, I've been fortunate to be a part of our evolution into a best-in-class operator with a unique and valuable business model. I am incredibly proud of the team that we have assembled and grateful for the opportunity to lead Pangaea into our next phase of multi-year growth and shareholder value creation. Turning to Q4 of 2025, we delivered solid results supported by a strong completion to the 2025 Arctic ice season and stable overall dry bulk demand.

Mads Boye Petersen: Thank you, Stefan, and welcome to those joining us on the call today. I'm excited to speak to you all on my first earnings call as CEO of Pangaea. On behalf of everyone at Pangaea, I want to extend our appreciation and gratitude to Mark Filanowski for his many years of leadership and for helping to facilitate a smooth transition. During my 16 years with the company, I've been fortunate to be a part of our evolution into a best-in-class operator with a unique and valuable business model. I am incredibly proud of the team that we have assembled and grateful for the opportunity to lead Pangaea into our next phase of multi-year growth and shareholder value creation. Turning to Q4 of 2025, we delivered solid results supported by a strong completion to the 2025 Arctic ice season and stable overall dry bulk demand.

Speaker #5: On behalf of everyone at Pangaea, I want to extend our appreciation and gratitude to Mark Filanowski for his many years of leadership and for helping to facilitate a smooth transition.

Speaker #5: During my 16 years with the company, I've been fortunate to be a part of our evolution into a best-in-class operator with a unique and valuable business model.

Speaker #5: I am incredibly proud of the team that we have assembled, and grateful for the opportunity to lead Pangaea into our next phase of multi-year growth and shareholder value creation.

Speaker #5: Turning to the fourth quarter of 2025, we delivered solid results supported by a strong completion to the 2025 Arctic ice season and stable overall dry bulk demand.

Speaker #5: Our fourth quarter TCE rate averaged 19% above the prevailing market for Panamax, Supermax, and Handy Size Indices, reflecting the value provided by our Nice ice class capabilities and long-term COAs.

Mads Petersen: Our Q4 TCE rates averaged 19% above the prevailing market for Panamax, Supramax, and Handysize indices, reflecting the value provided by our niche ice class capabilities and long-term COAs. Total shipping days increased 26% year-over-year, largely reflecting the integration of the Handysize vessels we acquired from SSI at the end of 2024. This expansion drove significant operating leverage. Adjusted EBITDA grew 22% year-over-year to $28.7 million, highlighting the advantages of our integrated logistics model and increased scale. During the quarter, we also continued investing in long-term strategic differentiation through our integrated logistics platform, which combines specialized shipping with terminal stevedoring and port services. We commenced operation in Lake Charles, Louisiana, and remain on track to launch expanded operations at the Port of Tampa early in the second half of this year.

Mads Boye Petersen: Our Q4 TCE rates averaged 19% above the prevailing market for Panamax, Supramax, and Handysize indices, reflecting the value provided by our niche ice class capabilities and long-term COAs. Total shipping days increased 26% year-over-year, largely reflecting the integration of the Handysize vessels we acquired from SSI at the end of 2024. This expansion drove significant operating leverage. Adjusted EBITDA grew 22% year-over-year to $28.7 million, highlighting the advantages of our integrated logistics model and increased scale. During the quarter, we also continued investing in long-term strategic differentiation through our integrated logistics platform, which combines specialized shipping with terminal stevedoring and port services. We commenced operation in Lake Charles, Louisiana, and remain on track to launch expanded operations at the Port of Tampa early in the second half of this year.

Speaker #5: Total shipping days increased 26% year over year, largely reflecting the integration of the Handy Size vessels we acquired from SSI at the end of 2024.

Speaker #5: This expansion drove significant operating leverage, adjusted EBITDA grew 22% year over year to 28.7 million, highlighting the advantages of our integrated logistics model and increased scale.

Speaker #5: During the quarter, we also continued investing in long-term strategic differentiation through our integrated logistics platform, which combines specialized shipping with terminal stevedooring and port services.

Speaker #5: We commenced operation in Lake Charles, Louisiana, and remain on track to launch expanded operations at the Port of Tampa early in the second half of this year.

Speaker #5: These investments deepen our customer relationships, enhance recurring revenue Pangaea into our customers' supply chains, creating additional value for our customers. We also continued to advance our fleet renewal strategy.

Mads Petersen: These investments deepen our customer relationships, enhance recurring revenue opportunities, and further integrate Pangaea into our customers' supply chains, creating additional value for our customers. We also continued to advance our fleet renewal strategy. During the quarter, we sold the 2005 build Bulk Freedom for $9.6 million. Additionally, we recently entered into an agreement to sell the Bulk Xaymaca for $9.6 million. These actions reflect our ongoing commitment to maintaining a modern, efficient fleet aligned with customer needs and evolving regulatory requirements. We remain disciplined in allocating capital. Our priorities of fleet renewal, organic growth, balance sheet strength, and shareholder returns remains unchanged going into 2026. Throughout 2025, we repurchased approximately 600,000 shares, approximately $3 million, and paid approximately $16.3 million in dividends.

Mads Boye Petersen: These investments deepen our customer relationships, enhance recurring revenue opportunities, and further integrate Pangaea into our customers' supply chains, creating additional value for our customers. We also continued to advance our fleet renewal strategy. During the quarter, we sold the 2005 build Bulk Freedom for $9.6 million. Additionally, we recently entered into an agreement to sell the Bulk Xaymaca for $9.6 million. These actions reflect our ongoing commitment to maintaining a modern, efficient fleet aligned with customer needs and evolving regulatory requirements. We remain disciplined in allocating capital. Our priorities of fleet renewal, organic growth, balance sheet strength, and shareholder returns remains unchanged going into 2026. Throughout 2025, we repurchased approximately 600,000 shares, approximately $3 million, and paid approximately $16.3 million in dividends.

Speaker #5: During the quarter, we sold the 2,005-build bulk Freedom for 9.6 million. Additionally, we recently entered into an agreement to sell the Berkshire Hathaway for 9.6 million.

Speaker #5: These actions reflect our ongoing commitment to maintaining a modern, efficient fleet aligned with customer needs and evolving regulatory requirements. We remain disciplined in allocating capital.

Speaker #5: Our priorities of fleet renewal, organic growth, balance sheet strength, and shareholder returns remain unchanged going into 2026. Throughout 2025, we repurchased approximately 600,000 shares for roughly $3 million.

Speaker #5: And paid approximately 16.3 million in dividends. We entered the year with approximately 103 million in unrestricted cash supported by strong operating cash flow. Our balance sheet strength gives us the financial flexibility to continue executing on these priorities while navigating the current dry bulk environment.

Mads Petersen: We entered the year with approximately $103 million in unrestricted cash, supported by strong operating cash flow. Our balance sheet strength gives us the financial flexibility to continue executing on these priorities while navigating the current dry bulk environment. Near-term dry bulk fundamentals remain constructive for our mix of minor bulks. The resumption of normal trade relations from the US to China has supported activity in the US Gulf, which is an important region for us and the dry bulk market as a whole. Limited effective supply growth. Systemic regulatory constraints support a favorable medium-term outlook. The recent development in the Arabian Gulf does not directly impact Pangaea, as we have no ships in the area, and it has historically not been a large part of our trade patterns.

Mads Boye Petersen: We entered the year with approximately $103 million in unrestricted cash, supported by strong operating cash flow. Our balance sheet strength gives us the financial flexibility to continue executing on these priorities while navigating the current dry bulk environment. Near-term dry bulk fundamentals remain constructive for our mix of minor bulks. The resumption of normal trade relations from the US to China has supported activity in the US Gulf, which is an important region for us and the dry bulk market as a whole. Limited effective supply growth. Systemic regulatory constraints support a favorable medium-term outlook. The recent development in the Arabian Gulf does not directly impact Pangaea, as we have no ships in the area, and it has historically not been a large part of our trade patterns.

Speaker #5: Near-term dry bulk fundamentals remain constructive for our mix of minor bulks. The resumption of normal trade relations from the US to China has supported activity in the US Gulf, which is an important region for us, and the dry bulk market as a whole.

Speaker #5: Limited effective supply growth, systemic regulatory constraints, support of favorable medium-term outlook. The recent development in the Arabian Gulf does not directly impact Pangaea as we have no ships in the area, and it has historically not been a large part of our trade patterns.

Speaker #5: The industry as a whole is feeling the indirect impacts through increased volatility in fuel prices, and the disruption of dry bulk trade flows. Pangaea is uniquely positioned in the Arctic, a reason why we have unparalleled operating experience and the largest and most modern high ice class fleet in our market segment.

Mads Petersen: The industry as a whole is feeling the indirect impacts through increased volatility in fuel prices and the disruption of dry bulk trade flows. Pangaea is uniquely positioned in the Arctic, a region where we have unparalleled operating experience and the largest and most modern high ice class fleet in our market segment. We see renewed geopolitical and commercial focus on the region, and over the long term, we expect this attention to be a positive tailwind. As we progress through Q1 2026, market sentiment remains positive and pricing continues to hold at favorable levels. To date, we have booked 5,920 shipping days at a TCE of $14,917 per day, reflecting healthy demand and an encouraging start to the year.

Mads Boye Petersen: The industry as a whole is feeling the indirect impacts through increased volatility in fuel prices and the disruption of dry bulk trade flows. Pangaea is uniquely positioned in the Arctic, a region where we have unparalleled operating experience and the largest and most modern high ice class fleet in our market segment. We see renewed geopolitical and commercial focus on the region, and over the long term, we expect this attention to be a positive tailwind. As we progress through Q1 2026, market sentiment remains positive and pricing continues to hold at favorable levels. To date, we have booked 5,920 shipping days at a TCE of $14,917 per day, reflecting healthy demand and an encouraging start to the year.

Speaker #5: We see renewed geopolitical and commercial focus on the region, and over the long term, we expect this attention to be a positive tailwind. As we progress through the first quarter of 2026, market sentiment remains positive, and pricing continues to hold at favorable levels.

Speaker #5: To date, we have booked 5,920 shipping dates at a TCE of reflecting healthy demand and an encouraging start to the year. Pangaea enters 2026 with strong operating momentum, a disciplined and proven strategy, and a well-capitalized balance sheet that provides flexibility across cycles.

Mads Petersen: Pangaea enters 2026 with strong operating momentum, a disciplined and proven strategy, and a well-capitalized balance sheet that provides flexibility across cycles. I am confident in our ability to continue generating consistent value for our customers and shareholders. With that, I'll now turn the call over to Gianni to walk through our Q4 financial results.

Mads Boye Petersen: Pangaea enters 2026 with strong operating momentum, a disciplined and proven strategy, and a well-capitalized balance sheet that provides flexibility across cycles. I am confident in our ability to continue generating consistent value for our customers and shareholders. With that, I'll now turn the call over to Gianni to walk through our Q4 financial results.

Speaker #5: I am confident in our ability to continue generating consistent value for our customers and shareholders. With that, I'll now turn the call over to Gianni to walk through our fourth quarter financial results.

Speaker #6: Thank you, Mads. And welcome to those joining us on the call today. Our fourth quarter financial results were highlighted by sustained TCE premiums relative to the prevailing market, supported by our niche ice class fleet during the peak of the Arctic trade season.

Gianni Del Signore: Thank you, Mads, and welcome to those joining us on the call today. Our Q4 financial results were highlighted by sustained TCE premiums relative to the prevailing market, supported by our niche ice class fleet during the peak of the Arctic trade season. Q4 TCE rates were $17,773 per day, a premium of 19% over the average published market rates for Panamax, Supramax, and Handysize vessels in the period. Our adjusted EBITDA for Q4 was approximately $29 million, an increase of about $5 million, driven by a 25% increase in shipping days and an 11% increase in TCE earned year-over-year. Adjusted EBITDA margin was 17% in Q4 2025, as compared to 13% in the prior year.

Speaker #6: Fourth quarter TCE rates were $17,773 per day, a premium of 19% over the average published market rates for Panamax, Supramax, and Handy Size vessels in the period.

Speaker #6: Our adjusted EBITDA for the fourth quarter was approximately $29 million, an increase of about $5 million, driven by a 25% increase in shipping days and an 11% increase in TCE earned year over year.

Speaker #6: Adjusted EBITDA margin was 17% in the fourth quarter of 2025 as compared to 13% in the prior year. Our total charter hire expenses increased by 36% compared to the fourth quarter of 2024, primarily due to a year-over-year increase in market rates to charter-in vessels as total charter-in days remained relatively flat.

Gianni Del Signore: Our total charter hire expenses increased by 36% compared to Q4 2024, primarily due to a year-over-year increase in market rates to charter in vessels as total charter-in days remained relatively flat. Our charter in cost on a per day basis was approximately $19,100 in Q4 2025, an increase of 39% year-over-year, which reflects a similar increase in the average market for Panamax, Supramax, and the Handysize vessels. Through today, we've booked 2,543 days at $14,390 per day for Q1 2026.

Speaker #6: Our charter-in cost on a per-day basis was approximately 19,100 dollars in the fourth quarter of 2025, an increase of 39% year over year, which reflects a similar increase in the average market for Panamax, Supermax, and Handy Size vessels.

Speaker #6: Through today, we've booked 2,543 days at 14,390 dollars per day for the first quarter of 2026. Vessel operating expenses increased by 94% year over year, primarily due to the acquisition of the SSI fleet.

Gianni Del Signore: Vessel operating expenses increased by 94% year over year, primarily due to the acquisition of the SSI fleet, which increased total own days by 56%, as well as incremental costs incurred related to the transfer of eight of our ice class vessels to Seamar Management during Q4. On a per day basis for full year 2025, vessel operating expenses, net of technical management fees, was $5,932 per day. Total general and administrative expenses increased by 7% from $6.3 million to approximately $6.7 million. The increase was primarily due to an increase in stock-based compensation expense due to the acceleration of vesting schedules during Q4 2025. In total, our reported GAAP net income for Q4 was $11.9 million or $0.19 per diluted share.

Speaker #6: Which increased total owned days by 56%, as well as incremental costs incurred related to the transfer of eight of our ice class vessels to Seymour Management during the fourth quarter.

Speaker #6: On a per-day basis, for full year 2025, vessel operating expenses net of technical management fees was $5,932 per day. Total general and administrative expenses increased by 7%, from $6.3 million to approximately $6.7 million.

Speaker #6: The increase was primarily due to an increase in stock-based compensation expense, due to the acceleration of vesting schedules during the fourth quarter of 2025.

Speaker #6: In total, our reported GAAP net income for the fourth quarter was $11.9 million, or $0.19 per diluted share. When excluding the impact of the gain on sale, unrealized losses from derivative instruments, as well as other non-GAAP adjustments, our reported adjusted net income attributable to Pangaea during the quarter was $10.1 million, or $0.16 per diluted share.

Gianni Del Signore: When excluding the impact of the gain on sale, unrealized losses from derivative instruments, as well as other non-GAAP adjustments, our reported adjusted net income attributable to Pangaea during the quarter was $10.1 million or $0.16 per diluted share. Moving on to the cash flows. Total cash from operations was approximately $15 million, driven by strong operating performance. At quarter end, we had approximately $103 million in unrestricted cash and total debt, including finance lease obligations, of approximately $372 million. During the quarter, our overall interest expense, net of interest income, was $5.4 million, an increase of $1.2 million due to new debt facilities entered into during Q3, as well as the assumed debt, and finance leases associated with the SSI acquisition.

Speaker #6: Moving on to the cash flows, total cash from operations was approximately $15 million, driven by strong operating performance. At quarter-end, we had approximately $103 million in unrestricted cash and total debt, including finance lease obligations, of approximately $372 million.

Speaker #6: During the quarter, our overall interest expense net of interest income was 5.4 million, an increase of 1.2 million, due to new debt facilities entered into during the third quarter as well as the assumed debt and finance leases associated with the SSI acquisition.

Speaker #6: As Mads noted, throughout 2025, we purchased just over 600,000 shares for approximately $3 million, and paid $16.3 million in quarterly dividends. Further, in February, we declared a $0.05 per share dividend to shareholders as of February 27th, payable on March 13th, 2026.

Gianni Del Signore: As Mads noted, throughout 2025, we purchased just over 600,000 shares for approximately $3 million and paid $16.3 million in quarterly dividends.

Gianni Del Signore: Further, in February, we declared a $0.05 per share dividend to shareholders as of 27 February 2026 and payable on 13 March 2026. Our buyback program complements our quarterly dividend policy, reinforcing our focus on delivering shareholder returns through a disciplined and balanced approach to capital allocation. Going forward, we will maintain the same disciplined approach to capital. 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. This includes advancing our terminal and stevedoring operations and continuing our fleet renewal strategy with a focus on capital efficient initiatives that enhance our ability to meet customer cargo needs and regulatory compliance over the long term. With that, we will now open the line for questions.

Speaker #6: Our buyback program complements our quarterly dividend policy, reinforcing our focus on delivering shareholder returns through a disciplined and balanced approach to capital allocation. Going forward, we will maintain the same disciplined approach to capital.

Speaker #6: 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 #6: This includes advancing our terminal and steam drawing operations and continuing our fleet renewal strategy with a focus on capital-efficient initiatives that enhance our ability to meet customer cargo needs and regulatory compliance over the long term.

Speaker #6: With that, we will now open the line for questions.

Speaker #1: Thank you. If you would like to ask a question, press star one on your keypad. To leave the queue at any time, press star two.

Operator: Thank you. If you would like to ask a question, press star one on your keypad. To leave the queue at any time, press star two. Once again, that is star one to ask a question. We'll pause for just a moment to allow everyone a chance to join the queue. Our first question will come from Liam Burke with B. Riley Securities. Please go ahead.

Speaker #1: Once again, that is star one to ask a question, and we'll pause for just a moment to allow everyone a chance to join the queue.

Speaker #1: And our first question will come from Laura Mayer with B. Riley Securities. Please go ahead.

Speaker #7: Hi. Good morning. Thank you for taking the question. My first question: have you been able to leverage your Handy Size vessels to grow your onshore port and terminal business?

Liam Burke: Hi, good morning. Thank you for taking the question. My first question, have you been able to leverage your Handysize vessels to grow your onshore port and terminal business?

Laura Maher: Hi, good morning. Thank you for taking the question. My first question, have you been able to leverage your Handysize vessels to grow your onshore port and terminal business?

Speaker #4: Good morning, Laura. Thank you for the question. Yeah, we are experiencing nice synergies, both between the Handy Size fleet and especially our existing Supermax fleet.

Mads Petersen: Good morning, Liam Burke, thank you for the question. Yeah, we are experiencing nice synergies both between the Handysize fleet and especially our existing Supramax fleet. We are also in our ports and terminals, we have also handled cargoes on several of our Handysize vessels. There's a nice spin-off between the two activities, yes.

Mads Boye Petersen: Good morning, Liam Burke, thank you for the question. Yeah, we are experiencing nice synergies both between the Handysize fleet and especially our existing Supramax fleet. We are also in our ports and terminals, we have also handled cargoes on several of our Handysize vessels. There's a nice spin-off between the two activities, yes.

Speaker #4: And we are also in our ports and terminals. We have also handled cargoes on several of our Handy Size vessels. So that's a nice spin-off between the two activities, yes.

Speaker #7: Thank you. And with the current geopolitical disruptions, and the tanker markets having received a lot of investor attention, has the dry bulk sector and Pangaea been affected by recent events in the Middle East?

Liam Burke: Thank you. With the current geopolitical disruption in the tanker markets has received a lot of investor attention. Has the dry bulk sector and Pangaea been affected by recent events in the Middle East?

Laura Maher: Thank you. With the current geopolitical disruption in the tanker markets has received a lot of investor attention. Has the dry bulk sector and Pangaea been affected by recent events in the Middle East?

Speaker #4: I think our direct exposure to the conflict in the area is virtually nonexistent. We have no ships. In the area, we have no ships.

Mads Petersen: I think our direct exposure to the conflict in the area is virtually non-existent. We have no ships in the area. We have no ships going there. We have no people working in the region. We had two of our seafarers that were transiting through an airport, but they were able to make it out and make it home safely. The direct impact on us is non-existent. The indirect impact, I think, is mainly being felt through oil price volatility and the potential for even further trade disruption as the materials on the dry side that are moving in and out of the US Gulf need to find alternative routes.

Mads Boye Petersen: I think our direct exposure to the conflict in the area is virtually non-existent. We have no ships in the area. We have no ships going there. We have no people working in the region. We had two of our seafarers that were transiting through an airport, but they were able to make it out and make it home safely. The direct impact on us is non-existent. The indirect impact, I think, is mainly being felt through oil price volatility and the potential for even further trade disruption as the materials on the dry side that are moving in and out of the US Gulf need to find alternative routes.

Speaker #4: Going there, we have no people working in the region. We had two of our seafarers that were transiting through an airport, but they were able to make it out and make it home safely.

Speaker #4: So, the direct impact on us is nonexistent. The indirect impact, I think, is mainly being felt through oil price volatility and the potential for even further trade disruption, as the materials on the dry side that are moving in and out of the US Gulf need to find alternative routes.

Speaker #4: So it's still very early in that process to see how that will all shake out. It's still very much uncertain, but on balance, it could have an impact for sure.

Mads Petersen: It's still very early in that process to see how that will all shake out. It's still very much uncertain. On balance, it could have an impact for sure.

Mads Boye Petersen: It's still very early in that process to see how that will all shake out. It's still very much uncertain. On balance, it could have an impact for sure.

Speaker #7: Great. Thanks all. Pass it on.

Liam Burke: Great. Thanks. I'll pass it on.

Laura Maher: Great. Thanks. I'll pass it on.

Speaker #4: Thank you, Laura.

Mads Petersen: Thank you, Liam.

Mads Boye Petersen: Thank you, Liam.

Speaker #1: Thank you. And as a reminder, that is star one to enter the queue. We'll take our next question from Pofrat with AGP. Please go ahead.

Operator: Thank you. As a reminder, that is star one to enter the queue. We'll take our next question from Poe Fratt with Noble Capital Markets. Please go ahead. Your line is open.

Speaker #1: Your line is open.

Poe Fratt: Hi. Good morning, Mads. Good morning, Gianni. Just a couple quick ones, a little more detailed, please. Can you talk about the impact, the potential impact of fuel prices, bunker fuel, and how you manage your, you know, forward-looking bunker fuel prices?

Speaker #8: Hi. Good morning, Mads. Good morning, Gianni. Just a couple of quick ones. A little more detailed, please. Can you talk about the impact, the potential impact of fuel prices, bunker fuels, and how you manage your forward-looking bunker fuel prices?

Speaker #4: Sure. And good morning, Pho. So, we manage our exposure to fuel prices primarily in two different ways. The biggest component of that is that several of our larger contracts—basically the longer-term ones—have bunker adjustment clauses in them.

Mads Petersen: Sure. Good morning, Po. We manage our exposure to fuel prices primarily in two different ways. The biggest component of that is that several of our larger contracts is basically the longer term ones have bunker adjustment clauses in them. The freight is changed depending on the prevalent fuel price at any point in time. Around the time we're performing the shipment, that calculation made that shows the impact of a change in the fuel price, and the freight is adjusted accordingly. Our earnings on that contract, on those contracts, it doesn't change really. It's sort of floating the fuel price.

Mads Boye Petersen: Sure. Good morning, Po. We manage our exposure to fuel prices primarily in two different ways. The biggest component of that is that several of our larger contracts is basically the longer term ones have bunker adjustment clauses in them. The freight is changed depending on the prevalent fuel price at any point in time. Around the time we're performing the shipment, that calculation made that shows the impact of a change in the fuel price, and the freight is adjusted accordingly. Our earnings on that contract, on those contracts, it doesn't change really. It's sort of floating the fuel price.

Speaker #4: So the freight is changed depending on the prevalent fuel price at any point in time. So around the time we were performing the shipment, there's calculation made that shows the impact of a change in the fuel price and the freight is adjusted accordingly.

Speaker #4: So our earnings on that contract, on those contracts, so it doesn't change really. It's sort of floating the fuel price. And then for our shorter exposure, we use we hedge through using derivatives that is not something that is new to us.

Mads Petersen: For our shorter exposure, we hedge through using derivatives. That is not something that is new to us. We've done that for many years. We have to when we are operating a business like ours where we have quite a big short-term book that has a fixed rate to it. That is possible. It's relatively cheap. It's pretty efficient. I believe on balance it's probably a strength for us that we can manage that exposure honestly.

Mads Boye Petersen: For our shorter exposure, we hedge through using derivatives. That is not something that is new to us. We've done that for many years. We have to when we are operating a business like ours where we have quite a big short-term book that has a fixed rate to it. That is possible. It's relatively cheap. It's pretty efficient. I believe on balance it's probably a strength for us that we can manage that exposure honestly.

Speaker #4: We have done that for many years. We have to when we are operating a business like ours, where we have quite a big shorter-term book that has a fixed rate to it.

Speaker #4: So that is possible. It's relatively cheap. It's pretty efficient. And I believe on balance, it's probably a strength for us. That we can manage that exposure, honestly.

Speaker #8: And so my sense is you're protected or you're hedged or insulated from any bunker fuel price increases for, say, the next six months to nine months.

Poe Fratt: My sense is you're protected or you're hedged or, you know, insulated from any bunker fuel price increases for, say, the next six months to nine months. Is that fair? That, you know, you're really exposed as we look into the latter part of 2026 and maybe into 2027 if oil prices, you know, continue to or remain where they are right now and bunker fuel prices have, you know, stay where they are.

Speaker #8: Is that fair? And so then you're really exposed as we look into the latter part of 2026 and maybe into '27 if oil prices continue to, or remain where they are right now, and bunker fuel prices have stayed where they are?

Speaker #4: No, I actually wouldn't say that, Pho. Because the further out you go in our contract base, that's where we have the bunker escalation mechanism in the contract.

Mads Petersen: No, I actually wouldn't say that, Po, because the further out you go in our contract base, that's where we have the bunker escalation mechanism in the contract. We are protected on our COA. Our COA portfolio, either through a bunker escalation clause or through a hedge position. The whatever future business we will be doing will be priced at whatever is the bunker prices at that time.

Mads Boye Petersen: No, I actually wouldn't say that, Po, because the further out you go in our contract base, that's where we have the bunker escalation mechanism in the contract. We are protected on our COA. Our COA portfolio, either through a bunker escalation clause or through a hedge position. The whatever future business we will be doing will be priced at whatever is the bunker prices at that time.

Speaker #4: So, we are protected on our COA portfolio either through a bunker escalation clause or through a hedge position. Whatever future business we will be doing will be priced at whatever the bunker prices are at that time.

Speaker #8: Okay. So you'll be able to dynamically adjust. In those two buckets that you talked about, Mads, what's the first bucket as far as the overall business?

Poe Fratt: Okay. You'll be able to dynamically adjust.

Mads Petersen: Yeah.

Mads Boye Petersen: Yeah.

Poe Fratt: What, you know, in those two buckets that you talked about, Mads, what's the first bucket as far as the overall business? You know, whether you measure it on, you know, tons moved, revenue, or, you know, some kind of metric.

Speaker #8: Whether you measure it on tons moved, or revenue, or some kind of metric?

Speaker #4: When you refer to the freight, or the ocean?

Mads Petersen: Sorry, you refer to like the freight?

Mads Boye Petersen: Sorry, you refer to like the freight?

Poe Fratt: Yes.

Mads Petersen: The ocean?

Mads Boye Petersen: The ocean?

Poe Fratt: Yeah, the freight to COA business. You know, I'm just trying to appreciate sort of how those two, you know, fuel price adjustments, you know, which is more meaningful, I guess.

Speaker #8: Yeah, the freight. The freight, the COA business. I'm just trying to appreciate sort of how those two fuel price adjustments—which is more, which has—which is more meaningful, I guess.

Speaker #4: I think if I understand your question correctly, Pho is that you're asking how much of contract with bunker adjustment clauses and how many are hedged with derivatives.

Mads Petersen: I think if I understand your question correct, Paul, is that you're asking how much of COA contract with bunker adjustment clauses or and how many are hedged with derivatives? Is that your question?

Mads Boye Petersen: I think if I understand your question correct, Paul, is that you're asking how much of COA contract with bunker adjustment clauses or and how many are hedged with derivatives? Is that your question?

Speaker #4: Is that your question?

Speaker #8: Yeah, that'd be helpful. Just any way you sort of want to portray it.

Poe Fratt: Yeah, that'd be helpful. Just any way you sort of want to portray it.

Speaker #4: Yeah, I would argue that probably, in the shorter term, it's probably done through derivatives—probably close to, I don't know, maybe 75%. And if you go further out, it's done 100% through bunker escalation clauses.

Mads Petersen: Yeah. I would argue that we probably, in the shorter term, it's probably done through derivatives, probably close to, I don't know, maybe 75%. As you go out 100, longer, further out, it's done 100% through bunker escalation clauses.

Mads Boye Petersen: Yeah. I would argue that we probably, in the shorter term, it's probably done through derivatives, probably close to, I don't know, maybe 75%. As you go out 100, longer, further out, it's done 100% through bunker escalation clauses.

Speaker #8: Okay. And then, if you could just expand on your comment that trade flows may be impacted by what's going on in the Middle East—and you talked about trade going out of the US Gulf.

Poe Fratt: Okay. If you could just expand on your comment that, you know, trade flows may be impacted by what's going on in the Middle East and, you know, you talked about, you know, trade going out of the US Gulf. Can you just expand on that comment a little bit more?

Speaker #8: Can you just expand on that comment a little bit more?

Speaker #4: So, I think one thing that we all have to bear in mind is that this is still very fresh. And I don't think you can see any changes.

Mads Petersen: I think one thing that we all have to bear in mind that this is still very fresh, and I don't think you can see any changes. A lot of this is sort of, you know, expectations or probably closer to speculation. There is an expected to be a pretty significant impact from reduction in LNG exports out of the US that potentially could be substituted with coal. Obviously, coal is being moved on bulk vessels, dry bulk vessels. Where that coal will be sourced from is still a little, I think, very much an unknown and up in the air, but potentially could be long-haul business that will positively affect the ton-mile demand for the dry bulk market.

Mads Boye Petersen: I think one thing that we all have to bear in mind that this is still very fresh, and I don't think you can see any changes. A lot of this is sort of, you know, expectations or probably closer to speculation. There is an expected to be a pretty significant impact from reduction in LNG exports out of the US that potentially could be substituted with coal. Obviously, coal is being moved on bulk vessels, dry bulk vessels. Where that coal will be sourced from is still a little, I think, very much an unknown and up in the air, but potentially could be long-haul business that will positively affect the ton-mile demand for the dry bulk market.

Speaker #4: So a lot of this is sort of expectations or probably closer to speculation. But there is a expected to be a pretty significant impact from reduction in gas exports out of the AG that potentially could be substituted with coal.

Speaker #4: And obviously, coal has been moved on bulk vessels, dry bulk vessels. And where that coal will be sourced from is still a little, I think, very much an unknown.

Speaker #4: And in the up, but potentially could be long-haul business. That will positively affect ton-mile demand for the dry bulk market.

Speaker #8: Okay. So specifically coal out of the US into backfill any shortfall in LNG out of the Middle East?

Poe Fratt: Okay. Specifically, coal out of the US into, to backfill, you know, any shortfall in LNG that out of the Middle East?

Speaker #4: Potentially, that could happen, yes. But again, it's still very early days in terms of that conflict and what the impact will be.

Mads Petersen: Potentially that could happen, yes. Again, it's still very early days in terms of that context and what the impacts will be. It is something that could happen, yes.

Mads Boye Petersen: Potentially that could happen, yes. Again, it's still very early days in terms of that context and what the impacts will be. It is something that could happen, yes.

Speaker #4: But it is something that could happen, yes.

Speaker #8: And then you detailed a lot of activity on the terminal, the port terminals. Stefan Neely, can you just maybe quantify the potential impact to 2026 numbers as far as the expansion the activity there?

Poe Fratt: You detailed a lot of activity on the, you know, terminal, the port terminals stevedoring. Can you just maybe quantify the potential impact to 2026 numbers as far as the expansion, you know, the activity there? Are we gonna see a step up in revenues and margin or is it gonna be you know, if we could just quantify that impact, that'd be helpful.

Speaker #8: Are we going to see a step up in revenues and margin? Or is it going to be if we could just quantify that impact, that'd be helpful.

Speaker #4: Yeah, Pho, I can take that. It's what we're seeing for Q4; a lot of these just started to come online. But really, the impact will be for 2026.

Gianni Del Signore: Yeah. Paul, I can take that. It's for Q4, a lot of these just started to come online, but it's really the impact will be for 2026. We have Port Aransas, we have Lake Charles, Tampa and Pascagoula all coming on. We do expect to step up incremental EBITDA next year. It's probably around $3 million for 2026 is what we're expecting in total. Just as things start to fall in place throughout 2026, we expect to see that incremental EBITDA for the full year.

Speaker #4: So we have a Rancis. We have Lake Charles. Tampa and Pascagoula all coming on. So we do expect a step up incremental EBITDA next year.

Speaker #4: And it's probably around $3 million for '26 is what we're expecting. In total, just as things start to fall in place, throughout 2026, we expect to see that incremental EBITDA for the full year.

Speaker #8: Okay, that was an EBITDA number, Gianni, that's clear.

Poe Fratt: Okay. That was an EBITDA number, Gianni? That's correct.

Gianni Del Signore: Yeah. Yeah. Correct.

Speaker #4: Yeah. Yeah. Correct.

Speaker #8: And then, can you just talk about the fleet renewal? You've sold two assets—one per quarter—for the last two quarters. What's on the front as far as the fleet renewal?

Poe Fratt: Can you just talk about the, you know, the fleet renewal? You sold 2 assets, 1 per quarter, for the last 2 quarters. What's on the front as far as the fleet renewal? Can you talk about both on the buy side and the sell side?

Speaker #8: Can you talk about both on the buy side and the sell side?

Speaker #4: Sure. The decisions around those two transactions, Bob, were driven primarily by the age of the vessel. They were both approaching special surveys. One was '22.

Mads Petersen: Sure. The decisions around those two transactions are driven primarily by the age of the vessel. They were both approaching special surveys. One was 22, one was 20 years old. That is historically when we have decided to dispose of assets. That's not really anything new. We're constantly in the market, looking at potential candidates to bring into the fleet. We are pretty optimistic about both the near-term market outlook and longer term as well. We expect, of course, to be more active on that side of the fleet, adding a little bit of capacity as we go.

Mads Boye Petersen: Sure. The decisions around those two transactions are driven primarily by the age of the vessel. They were both approaching special surveys. One was 22, one was 20 years old. That is historically when we have decided to dispose of assets. That's not really anything new. We're constantly in the market, looking at potential candidates to bring into the fleet. We are pretty optimistic about both the near-term market outlook and longer term as well. We expect, of course, to be more active on that side of the fleet, adding a little bit of capacity as we go.

Speaker #4: One was 20 years old. That is historically when we have decided to dispose of assets, so that's not really anything new. We're constantly in the market looking at potential candidates to bring into the fleet.

Speaker #4: And we are pretty optimistic about both the near-term market outlook and longer term as well. So we expect of course to be more active on the side of the on that side of the fleet, adding a little bit of capacity as we go.

Speaker #8: Great. Thanks a lot.

Poe Fratt: Great. Thanks a lot.

Speaker #4: Thanks, Pho. Thanks, Bob.

Mads Petersen: Thanks, Paul. Thanks, Bob.

Mads Boye Petersen: Thanks, Paul. Thanks, Bob.

Speaker #1: Thank you. And at this time, there are no further questions in the queue. So, I'd like to turn the meeting back over to Mads for any additional or closing remarks.

Operator: Thank you. At this time, there are no further questions in the queue. I'd like to turn the meeting back over to Mads for any additional or closing remarks.

Speaker #4: Thank you very much. Once again, thank you for joining our call. Should you have any questions, please feel free to contact us at investors@pangeals.com.

Mads Petersen: Thank you very much. Once again, thank you for joining our call. Should you have any questions, please feel free to contact us at investors@pangaeals.com and a member of our team will follow up with you. This concludes our call today. You may now disconnect.

Mads Boye Petersen: Thank you very much. Once again, thank you for joining our call. Should you have any questions, please feel free to contact us at investors@pangaeals.com and a member of our team will follow up with you. This concludes our call today. You may now disconnect.

Speaker #4: And a member of our team will follow up with you. This concludes our call today. You may now disconnect.

Speaker #1: Thank you. We have now reached our allotted time for this call. Today's meeting has ended. And we appreciate your time and participation. You may now disconnect.

Operator: Thank you. We have now reached our allotted time for this call. Today's meeting has ended, and we appreciate your time and participation. You may now disconnect.

Q4 2025 Pangaea Logistics Solutions Ltd Earnings Call

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