Pangaea Logistics Solutions Q4 2024 Earnings Report

Pangaea Logistics Solutions EPS Results

• Actual EPS: $0.16
• Consensus EPS: -$0.06
• Beat/Miss: Beat by +$0.22
• One Year Ago EPS: N/A

Pangaea Logistics Solutions Revenue Results

• Actual Revenue: $147.18 million
• Expected Revenue: $127.27 million
• Beat/Miss: Beat by +$19.90 million
• YoY Revenue Growth: N/A

Pangaea Logistics Solutions Announcement Details

• Quarter: Q4 2024
• Date: 3/13/2025
• Time: After Market Closes
• Conference Call Date: Friday, March 14, 2025
• Conference Call Time: 8:00AM ET

Pangaea Logistics Solutions (NASDAQ:PANL) is a global transportation and logistics company that provides ocean transportation and integrated logistics services. The company operates a fleet of drybulk vessels, including Handysize, Supramax and Ultramax carriers, to transport commodities such as coal, grain, minerals, ores and steel products. In parallel, Pangaea offers asset-light logistics solutions spanning freight forwarding, supply chain management and project cargo services, enabling end-to-end transport for bulk and breakbulk shipments.

Founded in 2012 as a spin-off from an established maritime shipping group, Pangaea Logistics Solutions went public on the Nasdaq in 2013 under the ticker PANL. The company is incorporated in Bermuda and maintains management offices in Purchase, New York. Over the years, it has expanded its shipping fleet and logistics network to support global trade lanes and respond to shifting commodity demand.

Pangaea’s maritime division focuses on spot and long-term chartering, voyage planning and vessel operations, leveraging its technical and commercial expertise to optimize fleet utilization. Its logistics division provides door-to-door services, including customs clearance, inland transportation and handling of specialized project cargoes. This dual model allows Pangaea to capture value across the supply chain and offer tailored solutions for industrial and agricultural shippers.

The company serves a broad geographic footprint spanning North and Latin America, Europe, Asia-Pacific and the Middle East. Pangaea is led by a senior management team with decades of experience in shipping, finance and logistics. Through strategic fleet additions, technology investments and partnership development, Pangaea Logistics Solutions aims to strengthen its position in the competitive drybulk shipping and logistics markets.

Pangaea Logistics Solutions Q4 2024 Earnings Call Transcript

Key Takeaways

• Strong Q4 2024 results with adjusted EBITDA up 20% YoY to $23.2 M and TCE rates 48% premium to the market despite a 22.6% drop in drybulk rates.
• Merged with SSI to add 15 handysize vessels, issued 18.1 M shares and assumed $100 M of debt, expanding the owned fleet to 41 vessels (60–70 operating) to grow logistics and terminal services.
• Warned of potential near-term volatility from proposed U.S. tariffs and new port entry fees, which could pressure market rates and trade flows.
• Emphasized its asset-light, cargo-centric model blending owned and chartered vessels, providing flexibility, cost efficiency and scalability through market cycles.
• Port and terminal operations are being expanded with new sites in Aransas and a Tampa terminal under construction, targeting higher-margin services.

Presentation

[Stefan Neely, Partner at Vallum Advisors]

Thank you, operator, and welcome to the Pangaea Logistics Solutions Fourth Quarter and Full Year twenty twenty four Results Conference Call. Leading the call with me today is CEO, Mark Silinowski Chief Financial Officer, Gianni DelSignore and COO, Mads Peterson.

[Stefan Neely, Partner at Vallum Advisors]

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 would like to turn the call over to Mark.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

Thank you, Stefan, and welcome to those joining us on the call today. After the market closed yesterday, we issued a release detailing our fourth quarter and full year 2024 results. Our fourth quarter performance was a strong finish to a transformational year for Pangaea, 1 in which our strong base of long term contracts and premium rate model supported a greater than 20% year over year increase in adjusted EBITDA despite pronounced softness in the broader drybulk market. Our differentiated cargo strategy and leading market share across global ice class trades have enabled us to drive consistent PCE rate outperformance versus the broader market, culminating in significant growth in fourth quarter profitability. On December 30, we successfully completed our previously announced merger with strategic shipping suite of 15 handysize dry bulk vessels.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

This complementary transaction will allow us to expand our business into a smaller size segment of the market, leveraging these smaller ships to grow our debadorings and terminal services offerings. In connection with this transaction, we issued 18,100,000.0 common shares to SSI in exchange for the 15 vessels and we assumed approximately $100,000,000 in vessel indebtedness, all of which have now been incorporated into our balance sheet. Following the conclusion of this transaction, we now have a total fleet of 41 owned vessels, supplemented by short term chartered in ships that bring our operating fleet into a range of 60 to 70 vessels at any given time. With the larger fleet, we are in a strong position to materially expand our logistics and terminal services across a broader footprint of high traffic ports consistent with our strategic focus. While we continue to experience robust demand across all our bulk trades, supported by ongoing economic expansion and domestic infrastructure investments, we recognize the potential headwinds posed by proposed tariffs and new port entry fees in The U.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

S. These factors could introduce near term volatility in market rates and they may drive structural shifts within the global shipping and drybulk landscapes. We remain vigilant in monitoring developments and trade policies that have potential implications for our business. Importantly, our asset light, cargo centric operating model designed to leverage a strategic mix of owned and chartered in vessels remains a competitive key advantage. This model enhances our flexibility, cost efficiency and scalability through market cycles, positioning us to effectively manage potential volatility while continuing to drive profitable growth, generate free cash flow and deliver premium TCE returns.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

For the fourth quarter of twenty twenty four, we reported adjusted net income of $7,600,000 and adjusted EBITDA of $23,200,000 representing significant year over year growth despite prevailing market rates decreasing by 22.6% during the quarter. Our adjusted EBITDA growth of approximately $4,000,000 compared to last year's fourth quarter reflects the performance of our active operating model and a full quarter of operations from the two ships we purchased earlier this year, which drove a more than 20% increase in our voyage days. Our TCE exceeded the benchmark index by 48% in the fourth quarter. Looking ahead to the first quarter of twenty twenty five, dry bulk demand has been seasonally soft across all major trade routes. Market prices have been volatile over the last few months due to anticipation, uncertainty and anxiety over international trade, although demand remains consistent.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

Through today, we have booked four thousand nine hundred and eighty two shipping days generating a PCE of $11,412 a day for the current twenty twenty five quarter. As we move further into 2025, we will continue to exercise a balanced return focused approach to capital allocation. Our recent vessel acquisitions, fleet combination and JV buyer are a testament to our confidence on our business plan and our disciplined capital allocation strategy that seeks to maximize long term shareholder returns. With that, I'll hand it over to Johnny for a discussion of our fourth quarter and full year financial results.

[Gianni Del Signore, CFO & Secretary at Pangaea Logistics Solutions]

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

[Gianni Del Signore, CFO & Secretary at Pangaea Logistics Solutions]

Our fourth quarter financial results are highlighted by strong earnings growth, sustained TCE premiums relative to the prevailing market and strong free cash flow generation, all during a period where broader demand and market prices softened. Fourth quarter TCE rates were approximately $15,941 per day, a premium of approximately 48 percent over the average published market rate for Supramax and Panamax vessels in the period, which was driven by strong fleet utilization within Arctic trade routes and our broad base of long term contracts and affreightment. Our adjusted EBITDA for the fourth quarter was $23,200,000 an increase of approximately $4,000,000 relative to the prior year period. Our adjusted EBITDA margin increased 180 basis points to 16.7% as strong growth in the total shipping days year over year and lower charter in rates drove operating efficiencies. This dynamic is enabled by our flexible cargo focused business model, which allows us to focus on meeting customer cargo obligations in the most efficient possible manner based on prevailing market conditions.

[Gianni Del Signore, CFO & Secretary at Pangaea Logistics Solutions]

Our total charter hire expense increased by 1.7% compared to the fourth quarter of twenty twenty three due to a 33% increase in total charter that was almost entirely offset by a 23% decrease in the prevailing market rates for Panamax and Supramax vessels. Our charter in cost on a per day basis was $13,787 in the fourth quarter of twenty twenty four. And through today, we booked approximately seventeen thirty six days at $10,243 per day for the first quarter of twenty twenty five. Vessel operating expenses net of technical management fees increased by approximately 9% year over year from an average of $5,971 per day last year to $6,525 per day in the fourth quarter of twenty twenty four. However, for the full year of 2024, vessel operating expenses net of technical management fees declined by 7% to $5,820 per day.

[Gianni Del Signore, CFO & Secretary at Pangaea Logistics Solutions]

In total, our reported GAAP net income attributable to Pangaea for the fourth quarter was $8,400,000 or $0.18 per diluted share compared to $1,100,000 or $0.03 per diluted share in the fourth quarter of last year. When excluding the impact of the unrealized losses from derivative instruments as well as other non GAAP adjustments, our reported adjusted net income attributable to Pangea during the quarter was $7,600,000 or $0.16 per diluted share, which was consistent with the fourth quarter of last year. Moving on to cash flows. Total cash from operations decreased by $4,600,000 year over year to approximately $19,200,000 due to a decrease in cash generated by net working capital, which offset improved operating expense operating earnings. At quarter end, the company had $86,800,000 in cash in total debt including finance lease obligations of approximately $4.00 $4,000,000 Our finance leases at the end of the quarter include approximately $100,000,000 of lease obligations associated with the strategic fleet combination, which closed on December 30.

[Gianni Del Signore, CFO & Secretary at Pangaea Logistics Solutions]

During the quarter, our overall interest expense was $4,700,000 an increase of 10.5% due to new debt facilities entered into during the third and fourth quarter of twenty twenty four. On factoring in the interest expense from leases assumed from the SSI merger, our interest expense would have been approximately $1,300,000 higher, which is the approximate run rate we expect going forward barring material changes in interest rates. Through the successful completion of the SSI acquisition, the strategic deployment of equity to expand our fleet and the recent buyout of the remaining 50% equity interest in our post Panamax ICE Class 1A vessels, we have taken a disciplined and opportunistic approach to capital allocation. These initiatives are designed to maximize long term capital return potential, while positioning the company for continued growth. In the near term, our capital allocation strategy will remain focused on targeted investments in our steam growing logistics operations, the renewal and modernization of our drybulk fleet and the continued reduction of our debt.

[Gianni Del Signore, CFO & Secretary at Pangaea Logistics Solutions]

Additionally, we remain committed to a consistent and sustainable return of capital strategy. With that, we will now open the line for questions.

[Operator]

Thank And we will take our first question from Liam Burke with B. Riley Securities. Please go ahead.

[Liam Burke, Managing Director at B. Riley Financial]

Mark, on your partial fixtures for the first quarter, obviously, it's a the rates in general have been bad, but you really outdistance them. I mean, that's on a relative basis a pretty impressive number. Is it just your COAs and contracts? What's contributing to that 40% boost?

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

Liam, we always look for work that pays a little bit more than market.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

We've always prided ourselves on taking tough cargos, making our ships work hard for what we do. We take dirty cargos, we go into icy waters, we go to places where other people don't really want to go because the risk the cost of hands, the risk, they're not willing to pay. So we will do that. We've got an excellent operating platform. We've got really the ship managers that really contribute to the bottom line for us.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

So in addition to the COAs, the contracts that we enter into, we look for things that add value. That's our whole business plan in in a nutshell.

[Liam Burke, Managing Director at B. Riley Financial]

That's great. Just as a follow on to that, you've added new vessels on the year end acquisition. How quickly do you think you can roll those vessels from their traditional chartering to the Pangaea chartering platform?

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

We've made great progress already. I think we've done half a dozen different voyages on these ships, the planned voyages, on these ships that in trade that they haven't done so much of. And I'm talking about taking the ships into the icy waters and taking the dirtier cargos and visiting places where they haven't been before. So we are making progress already. But in this difficult market, the margins to do all that stuff have shrunk as well as at the rates themselves.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

So we hope when the market bounces, we've seen a little greener numbers in the last couple of weeks on the drybulk side and on the indexes. We hope to make that happen quickly. Later this year, we should see some improvement in that.

[Liam Burke, Managing Director at B. Riley Financial]

Great. And if I could slide in one more quickly.

[Liam Burke, Managing Director at B. Riley Financial]

Your Port Services business generated a little more profitability than you had in the past on similar type revenue levels. Is there anything going on there that allows you to eke out a little more profitability? Yes.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

What we've done is we've done more dry bulk voyages, dry bulk business in some of our terminals that pays a little bit more than some of the other stuff we do. But the port side is really bright for us.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

We've opened up a new port and operation in Aransas near Corpus Christi, a fast growing place that we think we'll be able to do some really nice business with. We've started the actual construction down in Tampa, Tampa Red Wing Terminal, where we'll bring 20 ships this year loaded with aggregate to discharge and store on that site. That's a big step for us in the terminal side. So we're looking at other business in Lake Charles. So it's really starting to come together for us.

[Operator]

Thank you. And we'll take our next question from Poe Frott with AGP. Please go ahead.

[Poe Fratt, Equity Research Analyst - Transportation at Alliance Global Partners]

Glad you're all well. When I look at the capital allocation, you highlighted two things. One, fleet renewal and then debt reduction. And with the fleet renewal you added with the special guy, you added Handy. Can you help me understand how to frame the capital allocation and fleet renewal?

[Poe Fratt, Equity Research Analyst - Transportation at Alliance Global Partners]

Do you think that you have an optimal number of owned vessels right now? Or do you think that, it might be worthwhile to scale back and pay down debt by selling some of the older assets?

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

Oh, boy. Paul, like every ship owner, we are always trying to grow our fleet. But we want to do it cautiously, we want to do it thoughtfully.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

We just took on a space slug of new ships, the 15 Handy. That brings us a long way toward our growth goal. There is some renewal to do. We've got some older ships reaching the 20 year age. So we will sell off some of those ships as they come up to 20 years of age.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

What we do with the proceeds, it really we haven't decided yet where we should put that money, whether we should pay down debt. We don't think we're overleveraged today, Although, in a great trend down, that might not be the best use of capital. We want to be opportunistic in buying ships. So we'll wait for the market to drop a little bit. And we will want to take advantage of that going forward, but not 15 more this year for sure.

[Gianni Del Signore, CFO & Secretary at Pangaea Logistics Solutions]

Paul, if I could add on the debt service side for 2025, we basically have steady repayments only, no balloon repayments on our debt facility. So it's around $11,000,000 of debt service per quarter, pretty steady right until 2027 when we have our first meaningful balloon payment. But then if we look at our debt structure as a whole, We're fixed on a large portion, about 34 percent of our debt is fixed and then about 27% of our debt is capped or is fixed through an interest rate cap. And then the remaining is floating. So there is, I think, opportunity if we wanted to attack some.

[Gianni Del Signore, CFO & Secretary at Pangaea Logistics Solutions]

But when I look at debt service for 2025 and even right through 2026, we have a pretty steady repayment forecast ahead and we can be opportunistic if we want to. We're not forced necessarily to repay anything unless we choose to. And on that fiscal limit comes up in 'twenty seven, that debt is on ships that are readily refinancable.

[Poe Fratt, Equity Research Analyst - Transportation at Alliance Global Partners]

Great. Those metrics are really helpful.

[Poe Fratt, Equity Research Analyst - Transportation at Alliance Global Partners]

So just on the margin, you're more of a buyer than a seller with where asset values are right now?

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

Well, we'd like to see asset value come down a tick more before we jump in, but Great.

[Poe Fratt, Equity Research Analyst - Transportation at Alliance Global Partners]

Can Jamie, can you highlight the operating leverage that you with the acquisition of SSI, maybe one way to look at it would be your G and A level. Can you highlight your current per day G and A level or maybe in an absolute level for the first quarter of twenty twenty five?

[Gianni Del Signore, CFO & Secretary at Pangaea Logistics Solutions]

Sure.

[Gianni Del Signore, CFO & Secretary at Pangaea Logistics Solutions]

From a G and A perspective per day for 2024, the number was about $1,200 per day was our overall G and A cost. The addition of the vessels in our platform is quite scalable when you look at the vessel operation side. The incremental G and A to add the number of vessels that we did is not really a significant increase. So on a per day basis, I do expect it to be relatively consistent per shipping day, correct. On a per ship day, I do expect it to remain relatively consistent or even maybe even come down a little bit as we see some of that sort of economy of scale and our operation really kick in.

[Gianni Del Signore, CFO & Secretary at Pangaea Logistics Solutions]

So I don't expect while the number is certainly there will be incremental G and A with the number of people we've onboarded as part of the acquisition, about 10 people that were brought on to the team. But on a per day basis, we're still pretty comfortable. So I think we have we can deploy our operating model in a really efficient way.

[Poe Fratt, Equity Research Analyst - Transportation at Alliance Global Partners]

Great. And do you have sort of, what's the target for absolute G and A in the first quarter then?

[Poe Fratt, Equity Research Analyst - Transportation at Alliance Global Partners]

Probably incremental amount of you mean from a, Paul, just to clarify, from a dollar perspective? Yes, dollar. Just total dollar at this point in time, which is the run rate for the first quarter.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

I think what we have there in the fourth quarter, what we're showing there is probably a it's actually probably a good indication for a quarterly rate for next year. So just to clarify, so G and A and the total dollar amounts could be fairly flat, maybe up a little bit, but your shipping days are obviously going to be a lot higher.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

You're running right now, you ran a fleet of 62, you're 42 owned or 41 owned. Is that a fair way to look at it, Gian?

[Gianni Del Signore, CFO & Secretary at Pangaea Logistics Solutions]

I think for the full year, like I said, I think we'll probably see an incremental amount. And that number, we have not necessarily disclosed yet. But for the full year compared to $24,000,000 I would say it's an incremental amount of probably $2,000,000 1 million dollars to $2,000,000 of incremental G and A.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

The other thing that impacts the number you're looking for, the ship, the cost per shipping day, is the number of charter in ships we have at any point in time. Time.

[Gianni Del Signore, CFO & Secretary at Pangaea Logistics Solutions]

Yes.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

So that can cause that product to be to move up and down.

[Poe Fratt, Equity Research Analyst - Transportation at Alliance Global Partners]

Great.

[Poe Fratt, Equity Research Analyst - Transportation at Alliance Global Partners]

And then it looks like at year end, you're running 62. And can you give me sort of either a snapshot right now on how many what's your total operating fleet or potentially what we should use for an average for the first quarter as far as the operating fleet?

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

Matt here. We probably take lower than that now of maybe around 60, which is not that it fluctuates a little bit. We tend to shrink the feet a little bit when the market is depressed.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

So of course the hope is that as the market picks up, the child end business also grows in the rest of the year.

[Poe Fratt, Equity Research Analyst - Transportation at Alliance Global Partners]

Great. And then Jenny or maybe Matt, you can highlight first quarter drydocking and maybe drydocking for the year as far as idle time on the fleet?

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

Yes. So it's a for us and for many others in the business, it's a big year for drydocking, right?

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

We have four ships in drybark right now. We will have 12 in total for the year. So that's the situation. The ship spend is about twenty five to thirty days in drybark these days.

[Poe Fratt, Equity Research Analyst - Transportation at Alliance Global Partners]

Great.

[Poe Fratt, Equity Research Analyst - Transportation at Alliance Global Partners]

And congratulations on closing the transaction and also buying in the 50% in order to book.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

Thank you, Bob.

[Gianni Del Signore, CFO & Secretary at Pangaea Logistics Solutions]

Thanks, Bob.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

Good to hear.

[Operator]

Thank you. And we will take our next question from Neil Palmison with Fearnley Securities. Please go ahead.

[Nils Olav Furre Thommesen, Equity Research Analyst at Fearnley Securities]

Yes. Good morning. I've been quite extensive amount of questions on capital allocation, but I'd just like to add one more. And the market is where it is. And I guess you're looking at quite a big reduction in earnings for Q1.

[Nils Olav Furre Thommesen, Equity Research Analyst at Fearnley Securities]

And with your amortization profile being what it is, how should we think about dividend as earnings are a bit suppressed over the coming, let's say, one, perhaps two quarters? Do you expect to maintain that level or do we see amendments to the run rate dividend that's been paid over the past couple of quarters?

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

Anil, thanks for the question. The dividend consideration is the quarterly one by the board every meeting. And we look at the market, we look at the cash flow generation capability of our fleet, upcoming capital expenditures like docking.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

So we don't have a fixed formula, but we look at it every quarter. It is our hope to we strive to have a consistent and sustainable dividend. That's what we talk about every quarter when dividend discussion comes up.

[Nils Olav Furre Thommesen, Equity Research Analyst at Fearnley Securities]

Yes, understood. And a bit on your terminal operations, you're saying that you expect to be complete with expanding those operations in the second half twenty twenty five in Tampa.

[Nils Olav Furre Thommesen, Equity Research Analyst at Fearnley Securities]

Just wondering what sort of earnings that we can expect that the run rate when you're at full operations? And are you seeing any incremental investment opportunities in that space currently?

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

Johnny, do you want to talk about the upcoming year? What we think an income is when we're Proportion of Germany.

[Gianni Del Signore, CFO & Secretary at Pangaea Logistics Solutions]

Yes.

[Gianni Del Signore, CFO & Secretary at Pangaea Logistics Solutions]

For Port and Terminals, what Mark had said earlier, I think we're seeing a lot of opportunities there. It was a good fourth quarter like that was identified. It was good margins, especially in our especially in our dry bulk side in Fort Everglades and the early morning volume there. But next year, projects are coming online over not really in a straight line manner that can be somewhat lumpy. But we do expect it to grow in 2025 and especially as we get towards the end of the year.

[Gianni Del Signore, CFO & Secretary at Pangaea Logistics Solutions]

But I think what the fourth quarter is a good indication of a decent run rate of operations for our ports and terminals. And then as projects come on, there will be incremental EBITDA generated, especially for the second half of next year. Year. Sorry, second half of twenty twenty five rather.

[Operator]

Thank you. And we will take our next question from Michael Maleficent with Sidoti and Company. Please go ahead.

[Michael Mathison, Analyst at Sidoti & Company]

Good morning, you guys and congratulations on the quarter.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

Thanks, Michael.

[Michael Mathison, Analyst at Sidoti & Company]

In your earnings presentation, Yi pointed out that near term growth in shipping capacity is going to be pretty limited, obviously benefiting TCE rates. But looking ahead to the medium term, are there enough ships being delivered to potentially reduce TCE? And does the specialized nature of your business and your port calls kind of insulate you a bit from competitive pressures?

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

Well, Michael, you hit sort of on right on one of our plans to lean a little bit more towards ports and terminals to get us away from the volatility of the shipping business. We think we've done that and demonstrated their work over the past few years where we our performance is a little bit better than the general market. So that is a goal of ours to be a little more consistent, a little more show a little more sustainable income on the bottom line. Regarding the number of shifts, I think you're talking about the industry, new building deliveries into the business. That was identified as a couple of years ago as a real strength behind the dry bulk industry that the order book was low and that as time went on, there would be some tightness in the market because of the restricted deliveries of new ships into the market.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

New building orders have increased some, but they're still relatively low compared to historic delivery book. And we expect that over the next couple of years that that will continue to have a little cause a little tightness in the market and keep rates a little bit higher.

[Michael Mathison, Analyst at Sidoti & Company]

Great. If you'll permit a follow-up, you stated earlier that you're planning to be pretty thoughtful and disciplined about capital allocation, particularly debt pay downs. Is there sort of a target ratio for leverage?

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

I guess we like to see and we look at it in a couple of different ways. We look at debt as it relates to shareholders' equity on the balance sheet. We look at it going forward in terms of the cash needed to service the debt. We look at it compared to debt outstanding compared to the actual vessel values, fair market values on our of ships we have in our fleet. We look at it in a lot of different ways.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

And at this point, we don't think we're over leveraged. We think we're somewhere around 50% if you look at all those ratios together.

[Gianni Del Signore, CFO & Secretary at Pangaea Logistics Solutions]

Yes. Just a comment on the when we look at it from a debt to vessel value perspective, yes, we're around 50% to 55% from a book value perspective. And then if it's adjusted, we also look at it from a fair market value perspective.

[Gianni Del Signore, CFO & Secretary at Pangaea Logistics Solutions]

And I think we're generally comfortable where we stand. And yes, and then ultimately, when we look at new debt facilities, we set certain thresholds that we don't want to exceed a certain leverage amount when entering into new facility. But when we look at corporate leverage now, I think we're pretty comfortable where we stand and what our, as I mentioned, our repayment forecast for the next couple of years, we're very comfortable.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

What helped us a little bit in terms of the cash necessary to make debt service is that we fixed interest rates on a significant part of the debt a few years ago and that has paid off for us.

[Operator]

Thank you. And we will take our next question from Clement Mullens with Value Investors Edge. Please go ahead.

[Climent Molins, Head of Shipping Research at Value Investor's Edge]

Good morning. Thank you for taking my questions. You have already provided ample commentary on how costs should move going forward. But as we think about the handy sizes, is there any potential for OpEx per day to come in below your figures for Supermaxes and Panamaxes? Any additional color you can provide on that would be greatly appreciated.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

Thanks for the question, Clement. I think our estimate is that the OpEx will be fairly similar to our supermax. We don't really represent the operating cost.

[Climent Molins, Head of Shipping Research at Value Investor's Edge]

Makes sense. Thank you.

[Climent Molins, Head of Shipping Research at Value Investor's Edge]

And final question for me. This one is more on the modeling side. Could you quantify the amount of operating lease liabilities you had on the balance sheet as of year end?

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

Sorry, could you ask that again? What was the liabilities?

[Climent Molins, Head of Shipping Research at Value Investor's Edge]

Yes. The amount of operating lease liabilities you have on the balance sheet as of your end for mobile Operating leases? Exactly. Yes.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

Operating lease, so if I understand the question correctly, the operating, we don't have any operating leases on the balance sheet.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

I'm assuming you're referring to maybe chartering in the charter in vessels that maybe from an accounting perspective be classified as leases. But all of our charter Are you referring to that? Yes, yes. So our charter in vessels to the extent we don't charter in vessels for greater than a year. Typically, our average is three to six months, sometimes a little bit longer.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

Sorry, sometimes longer or shorter depending on where the market is. Currently, we're obviously chartering in on a shorter term basis for trips and short charters. So none of our chartered investments would be considered an operating lease and capitalized on the balance sheet, considering our charter and strategy.

[Climent Molins, Head of Shipping Research at Value Investor's Edge]

Makes sense. Thank you for the color. Thank you for taking my questions.

[Operator]

Thank you. And we do have a follow-up question from Pophrat with AGP. Please go ahead.

[Poe Fratt, Equity Research Analyst - Transportation at Alliance Global Partners]

Hi. I just have two more. Mark, you talked about increasing the Steve Doherty business to smooth out the volatility of earnings. We've been talking about for a couple of years, but right now it's 2% of revenues in the fourth quarter roughly. It goes that percentage is likely to go down with the acquisition you made at the end of last year.

[Poe Fratt, Equity Research Analyst - Transportation at Alliance Global Partners]

Are there any big opportunities out there to to bulk up that business? No pun intended. But are there any big opportunities out there? Or is it just going to go slow and steady and never really get above 5% of total revenue?

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

Well, we were looking at the Panama Canal deal before it was taken away from us by BlackRock, I guess.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

But there are big deals out there to do, Poe. But right now, we're trying to do it on a without spending a lot of money upfront. We're making progress. We're doing it without buying land, which is an expensive way to do it. But as we grow and as we show up in more and more places, more and more opportunities are coming to us.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

So I think there's a little bit of momentum that we're building here that we'll be able to we're working on. And, Pogo, just to comment also that a big part of the value of this operation shows up in our TCE, right, is that ability to package services, the trade and fees going into one package. So that part of the business also drives the TC premium that has been made in a couple of times on the call.

[Poe Fratt, Equity Research Analyst - Transportation at Alliance Global Partners]

Okay. And then you know, made a big acquisition at the end of last year.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

There was extensive, you know, discussions and negotiations and due diligence leading up to that because it took a while that, you know, for that deal to get across the finish line. You're seventy days into it. Can you give me an idea of, you know, how it's going so far, whether there's been any surprises integrating that fleet? Any either positive or negative that you want to highlight on how that transaction is panning out so far? I think it's all been positive for us, Paul.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

It's not a totally different business for us, but it does give us a little different look at some of the cargos that are available and ways to offer more services, more of an expanded service to our customers. So our participation has been welcomed by the market. The people that came with us are doing a great job of considering our business plan and doing things a little differently with their fleet. And it's our goal to have people cross train in the different segments and bring different thoughts to each of the pieces of business we do. So, it's been nothing but positive actually.

[Poe Fratt, Equity Research Analyst - Transportation at Alliance Global Partners]

Great. Very helpful. Thank you.

[Operator]

Thank you. And it appears that we have no further questions at this time. I will now turn the program back to Mark Zylinowski for any additional or closing remarks.

[Mark Filanowski, CEO & Director at Pangaea Logistics Solutions]

Thank you for joining us on the call today. If you've got follow-up questions, we're always available through our links online. Thanks very much.

[Operator]

Thank you. This does conclude today's presentation. Thank you for your participation. You may disconnect at any time.

Participants

Executives

• Mark Filanowski, CEO & Director
• Gianni Del Signore, CFO & Secretary

Analysts

• Stefan Neely, Partner at Vallum Advisors
• Liam Burke, Managing Director at B. Riley Financial
• Poe Fratt, Equity Research Analyst - Transportation at Alliance Global Partners
• Nils Olav Furre Thommesen, Equity Research Analyst at Fearnley Securities
• Michael Mathison, Analyst at Sidoti & Company
• Climent Molins, Head of Shipping Research at Value Investor's Edge