Pangaea Logistics Solutions Q2 2025 Earnings Call Transcript

Quartr
Provided by Quartr
August 8, 2025

Key Takeaways

  • Positive Sentiment: We delivered TCE rates of $12,108/day, a 17% premium above average market rates, underscoring the strength of our differentiated charter-in strategy even in a challenging environment.
  • Neutral Sentiment: We reported an adjusted net loss of $1.4 million and an adjusted EBITDA of $15.3 million, with positive EBITDA demonstrating the resilience of our flexible, cargo-focused business model despite a 25% drop in market rates.
  • Positive Sentiment: Shipping days rose 51% year-over-year thanks to the SSI Handymax fleet addition and charter-in ships, enabling operating margin arbitrage and reducing vessel operating costs per day.
  • Positive Sentiment: We initiated financings totaling $18 million for two unlevered vessels and sold the older Endeavor, actions that optimize our cost of capital, preserve balance sheet strength and support opportunistic fleet renewal.
  • Negative Sentiment: Industry outlook remains cautious as geopolitical uncertainty and evolving U.S. tariff policies have led some shippers to delay long-term route decisions, potentially weighing on near-term shipping demand.
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Earnings Conference Call
Pangaea Logistics Solutions Q2 2025
00:00 / 00:00

There are 3 speakers on the 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 Second two thousand twenty five earnings teleconference. Today's call is being recorded and will be available for replay beginning at 11:00AM Eastern Standard Time. The recording can be accessed by dialing 809381601 domestic or (402) 220-1546 internationally.

Operator

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 and 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 2. We do ask that you please pick up your handset for optimal sound quality.

Operator

It is now my pleasure to turn the floor over to Stefan Neely with Valum Advisors.

Speaker 1

Thank you, operator, and welcome to the Pangaea Logistics Solutions second quarter twenty twenty five results conference call. Leading the call with me today is CEO, Mark Filanowski Chief Financial Officer, Gianni Delfugiare and COO, Matt Peterson. Today's discussion contains forward looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today's forward looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the SEC. Except as required by law, we undertake no obligation to update our forward looking statements.

Speaker 1

At the conclusion of our prepared remarks, we will open the line for questions. With that, I would like to turn the call over to Mark. Thank you, Stefan, and welcome to those joining us on the call today. Our results this quarter reflect continued disciplined execution of our business strategy. Despite a challenging and uncertain market environment, we delivered TCE rates that were 17% above the broader market, demonstrating the strength of our operating model.

Speaker 1

Our premium TCE performance during the quarter was primarily the result of our differentiated charter in strategy, which enabled us to capitalize on short term market dynamics through flexible and cost effective fleet deployment. For the 2025, we reported an adjusted net loss of $1,400,000 and adjusted EBITDA of $15,300,000 While average market rates declined 25% compared to the second quarter of last year, Our ability to generate positive EBITDA underscores the resilience of our flexible cargo focused approach. Total shipping days rose 51% year over year, driven by the addition of the SSI Handymax fleet of 15 ships as well as added days from charter in ships that supplement our own fleet, providing operating margin arbitrage opportunities. Market conditions during the quarter were mixed. Larger vessel classes like Panamax and Supramax outperformed Handysize, and the larger segment saw improving trends late in the quarter, driven by a strong South American grain harvest, which lifted overall dry bulk pricing heading into the third quarter.

Speaker 1

The industry outlook remains cautious due to geopolitical uncertainty driven by evolving U. S. Tariff policies and global trade dynamics. These factors have caused some shippers to delay longer term route trade route decisions. Despite these headwinds, we remain optimistic about the medium and long term outlook for the dry bulk market, particularly within the dry bulk trade and geographic regions we serve.

Speaker 1

These markets are supported by sustainable demand and are relatively more insulated from the impact of tariffs, especially our geared segments, which participate in minor bulk commodities. Vessel supply growth may weigh on rates in the short term. However, the continued evolution of global emission standards and a steadily aging global fleet will reduce supply in the longer term, creating a favorable backdrop for supply and demand. For the 2025, broader dry bulk market pricing has improved as we enter the seasonal peak in our Arctic trade activity. As of today, we booked three thousand six hundred and seventy one shipping days for the set for the third quarter, generating a TCE of $14,272 per day.

Speaker 1

Our vertically integrated service offering, cargo focused business model, coupled with our niche ice class capabilities, position us well to continue delivering premium TCEs and value added services that differentiate us from traditional dry bulk carriers. We're nearing completion of the expansion of our port and logistics infrastructure at the Port Of Tampa. This project reflects our strategic commitment to grow our integrated logistics platform and build a business that is less sensitive to market rate volatility and more aligned with long term customer needs. Additionally, we'll start new terminal operations in Texas, Louisiana and Mississippi in the next few months. And we recently completed the purchase of our remaining 49% equity stake in C Mar Management, our technical operations platform, enhancing our ability to control our technical operations.

Speaker 1

Lastly, we've initiated a financing process for two unlevered ships and sold our strategic endeavor. Johnny will provide more detail shortly, but these moves reflect our proactive approach to optimizing our cost of capital, preserving balance sheet strength and allowing us to be more opportunistic in fleet renewal. Our long term strategy remains focused on disciplined capital allocation, prioritizing fleet optimization, returning capital to shareholders and maintaining a strong, flexible balance sheet. With that, I'd like to turn the call over to Johnny to review our second quarter financial results. Thank you, Mark.

Speaker 1

Welcome to those joining us on the call today. Our second quarter financial results were highlighted by sustained TCE premiums relative to the prevailing market as we capitalize on short term market dynamics by utilizing our chartered in strategy. Second quarter TCE rates were $12,108 per day, a premium of approximately 17% over the average published market rates for Panamax, Supramax and Handysize vessels in the period, which was driven by our chartered in strategy and the efficiencies created by our expanded fleet. Our adjusted EBITDA for the second quarter was 15,300,000.0 a decrease of approximately 600,000 relative to the prior year period. Our adjusted EBITDA margin decreased from 12.1% last year to 9.8% in the 2025 as a result of lower market rates.

Speaker 1

Our total charter hire expenses decreased by 4% compared to the 2024, primarily due to a 31% decrease in prevailing market rates, partly offset by a 35% increase in charter in days. Our charter in cost on a per day basis was $11,813 in the 2025, a decrease of approximately 29% year over year. Through today, we've booked approximately one thousand four hundred and forty three days at $12,653 per day for the 2025. Vessel operating expenses increased by approximately 59% year over year, primarily due to the acquisition of the exercise fleet, which increased total owned days by 66%. On a per day basis, vessel operating expenses net of technical management fees decreased from an average of $6,246 per day to $5,876 per day in the '5.

Speaker 1

Total general and administrative expenses increased by 43% from $5,000,000 to approximately $7,000,000 The increase was primarily due to the consolidation of our technical management operations, which resulted in $1,800,000 in expenses being recognized in G and A, which were previously recognized in vessel operating expenses as technical management fees. In total, our reported GAAP net loss for the first quarter was $2,700,000 or a loss of $04 per diluted share. When excluding the impact of the unrealized losses from derivative instruments as well as other non GAAP adjustments, our reported adjusted net loss attributable to Pangaea during the quarter was $1,400,000 or a loss of $02 per diluted share. Moving on to cash flows. Total cash from operations increased by approximately $5,000,000 year over year to $14,400,000 primarily due to an increase in cash provided by net working capital.

Speaker 1

At quarter end, we had approximately 59,000,000 in cash and total debt, including finance lease obligations of approximately $376,000,000 During the quarter, our overall interest expense was 5,700,000.0, an increase of approximately $2,600,000 due to new debt facilities entered into during the second half of last year and from the assumed debt and finance leases associated with the SSI acquisition. As Mark mentioned, subsequent to the end of the quarter, we have begun the process of financing the strategic spirit for $9,000,000 payable over seven years to $1,000,000 and an interest rate of sulfur plus 1.95%, and the strategic vision for $9,000,000 payable over five years to $3,600,000 at an interest rate of silver plus 1.95%. The financings are expected to close in August 2025 and September 2025, respectively, giving us additional cash of $18,000,000 on our balance sheet. In addition, we executed on our share repurchase program announced in May, repurchasing approximately 203,000 shares during the second quarter at an average price of 4.96 per share. Since quarter end, we bought back an additional 135,000 shares, bringing our total to approximately 338,000 shares.

Speaker 1

Our share repurchase program complements our dividend policy and underscores our commitment to returning capital to shareholders in a disciplined and balanced manner. Looking ahead, our capital allocation priorities remain unchanged. We are committed to maintaining financial flexibility while pursuing a balanced return of capital to shareholders. In addition, we continue to invest selectively in high return opportunities across our logistics and Stephen Org operations and remain focused on the ongoing renewal and modernization of our fleet, prioritizing capital light initiatives that support long term competitiveness and compliance. With that, we will now open the line for questions.

Operator

Thank you. Press 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing 2. As a reminder, we do ask that you please pick up your handset for optimal sound quality. And we do have a question from Tophrat with AGP.

Operator

Please go ahead.

Speaker 1

Hey. Good morning. Can I Good morning, Tophrat? Good morning, Mark. Can I just ask you about the asset sales?

Speaker 1

It looks like you you might be there's an asset held for sale on your balance sheet. Can you just explain what that is, please? That's the our our former strategic Durham. Endeavor. Endeavor, I'm sorry, strategic Endeavor.

Speaker 1

We took that ship in with the 15 Handyship. It was the oldest ship we acquired and the smallest ship. So we thought that it was a good time to move it out of the fleet and begin to look for a replacement when we think it's time to buy. And from that comment, Mark, it sounds like it's not time to buy right now. Can you just talk about the S and P market?

Speaker 1

Matt is a little closer to S and P market than I am. So I'm going to give him a chance to talk to you about that. So Thanks, Mark.

Speaker 2

Hi, Pro. The way we look at that on on the decision on the strategic endeavors is also has has been usually the case with us is that that ship was coming up against a special survey. So at that point, we sort of evaluate whether that what what we think makes the most sense in terms of investing the money in putting the ship through the special survey or selling it and and taking the cash and and be ready to redeploy it when we when we feel the time is is right. I I we probably agree with you that because of a lot of macro uncertainty at the moment, we are not sort of, you know, on the feeling that that that that that will happen straight away, but we are always looking at at at at them at shift of course and looking at candidates and, you know, we're we're a

Speaker 1

little bit picky when it comes to

Speaker 2

the shifts we would like to have. So, you know, we're not gonna rush out straight into anything. We we don't believe that there is so I have very compelling reason to do that when we look at asset values and also where the markets are trading at the moment.

Speaker 1

Okay. And then in your prepared remarks, you talked about the decisions on certain routes getting deferred. Can you just maybe give us a little more color on whether, you know, which specific markets or which routes you're seeing some decisions pending because of, you know, the macro uncertainty? Well, we had some movements from the Far East to The U. S.

Speaker 1

Earlier this year that we had some contracts committed on. And shipper said, we just got to take a pause here for a minute and see what's happening. And that sort of that sorted it out over time. The potential tariff rate came down, that movement became profitable again. So we began to make those moves again.

Speaker 1

So it's most things like that that would cause I think it's certain that supply lines will change. And nobody is really certain how much they'll change. But shipping drives on dry bulk shipping, especially drives on uncertainties and inefficiencies, and create opportunities for us. So we're out there looking for those opportunities. We're all over the world these days.

Speaker 1

We've got a larger fleet. We're putting more ships in The Pacific to capture some of these possibilities. Great. And then on the Port Logistics, it seems like you're doing more organic, just incremental investments in that business. Can you just talk about whether there are potentially any acquisition opportunities that are on the horizon?

Speaker 1

Tony, we've always focused, so on areas where we can get more involved in more than just moving cargo on a rocky ship. We want to try to participate in the ocean transportation also. So that's what we've tried to do is focus on certain routes, certain customers, certain commodities that fit our ships. So to go out and buy a big terminal at this point really doesn't fit our objective. We've done it all organically.

Speaker 1

We've done it through mostly through leases and port licenses, not buying a lot of not buying real estate, which is the real expensive part of the deal. With

Operator

with question.

Speaker 1

Next the transportation, and that's a little bit off center for us. Maybe the time will come when we've built up our own business, and it is time to take that next step and set up a totally separate leg of the company. But right now, we're trying to keep keep things related. We see the best results for us in that way. You.

Operator

Thank you. And at this time, there are no further questions in the queue. So I'd like to turn the call back over to Mark for any additional or closing remarks.

Speaker 1

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

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