Pangaea Logistics Solutions Ltd

Previous wording

(4)Gross profit represents total revenue less cost of transportation and service revenue less vessel depreciation.

Current wording

(4)Gross profit represents total revenue less cost of transportation and service revenue less vessel and terminal equipment depreciation.

Previous wording

The dry bulk transportation and logistics industry is known for its cyclicality and volatility, which can be attributed to fluctuations in vessel supply and demand for the transportation of dry bulk commodities. The Baltic Dry Index (“BDI”), a measure of dry bulk market performance, averaged 1,824 for the first quarter of 2024, up approximately 79%, compared to an average of 1,020 for the same quarter of 2023. The average published market rates for Supramax and Panamax vessels, reflecting the composition of the company's fleet, also increased approximately 41%, from an average of $9,702 in the first quarter of 2023 to $13,671 in the same period of 2024. Quarter over quarter, the average published market rates for Supramax and Panamax vessels remained relatively stable at $13,671 for the first quarter of 2024, compared to $13,922 for the fourth quarter of 2023, However, there was volatility within the first quarter of 2024, with rates fluctuating between lows of approximately $11,000 and highs of approximately $18,000. As a result of the industry's volatility, we have experienced fluctuations in our quarterly and annual operating results in the past, and we expect to continue experiencing such fluctuations in the future due to various factors, including cargo demand, vessel supply, competition, and seasonality.

Current wording

The dry bulk transportation and logistics industry is known for its cyclicality and volatility, which can be attributed to fluctuations in vessel supply and demand for the transportation of dry bulk commodities. The Baltic Dry Index (“BDI”), a measure of dry bulk market performance, averaged 1,853 for the second quarter of 2024, up approximately 53%, compared to an average of 1,215 for the same quarter of 2023. The average published market rates for Supramax and Panamax vessels, reflecting the composition of the company's fleet, also increased approximately 45%, from an average of $10,431 in the second quarter of 2023 to $15,104 in the same period of 2024. Quarter over quarter, the average published market rates for Supramax and Panamax vessels remained relatively stable at$15,104 for the second quarter of 2024, compared to $13,671 for the first quarter of 2024. However, there was volatility within the first quarter of 2024, with rates fluctuating between lows of approximately $11,000 and highs of approximately $18,000. As a result of the industry's volatility, we have experienced fluctuations in our quarterly and annual operating results in the past, and we expect to continue experiencing such fluctuations in the future due to various factors, including cargo demand, vessel supply, competition, and seasonality.

Previous wording

Inflation in the United States and many global markets is affecting various aspects of our Company's vessel operation costs, including crew travel, equipment transportation, and drydocking. While we expect crew payroll expenses to stabilize in the near and medium term, other inflated costs may increase our vessels' daily operating expenses. Typically, any fuel cost increases during voyages are managed through adjustments in cargo market rates passed on to customers or through fuel cost pass-through arrangements in long-term contracts.

Current wording

Inflation in the United States and many global markets is affecting various aspects of our Company's vessel operation costs, including crew travel, equipment transportation, and drydocking. While we expect crew payroll expenses to stabilize in the near and medium term, other inflated costs may increase our vessels' daily operating expenses. Typically, any fuel cost increases during voyages are managed through bunker hedging or through fuel cost pass-through arrangements in long-term contracts.

Previous wording

For the three months ended March 31, 2024, the Company's TCE rates were up 23% to $17,697 from $14,372 for the three months ended March 31, 2023. The Company's achieved TCE rates improved from the previous quarter as the overall dry bulk market rates improved for the three months ended March 31, 2024. The Company's achieved TCE rate for the three months ended March 31, 2024 outperformed the average of the Baltic panamax and supramax market indexes and exceeded the average market rates by approximately 29% due to its long-term contracts of affreightment, ("COAs"), its specialized fleet and its cargo-focused strategy.

Current wording

For the three months ended June 30, 2024, the Company's TCE rates were up 4% to $16,223 from $15,558 for the three months ended June 30, 2023. The Company's achieved TCE rates improved from the previous quarter as the overall dry bulk market rates improved for the three months ended June 30, 2024. The Company's achieved TCE rate for the three months ended June 30, 2024 outperformed the average of the Baltic panamax and supramax market indexes and exceeded the average market rates by approximately 7% due to its long-term contracts of affreightment, ("COAs"), its specialized fleet and its cargo-focused strategy.

Previous wording

•Net income attributable to Pangaea Logistics Solutions Ltd. was approximately $11.7 million for three months ended March 31, 2024 as compared to approximately $3.5 million for the same period of 2023.

Current wording

•Net income attributable to Pangaea Logistics Solutions Ltd. was approximately $3.7 million for three months ended June 30, 2024 as compared to approximately $2.8 million for the same period of 2023.

Previous wording

•Diluted net income per share was $0.25 for three months ended March 31, 2024, as compared to $0.08 for the same period in 2023.

Current wording

•Diluted net income per share was $0.08 for three months ended June 30, 2024, as compared to $0.06 for the same period in 2023.

Previous wording

•Pangaea's TCE rates were $17,697 for the three months ended March 31, 2024 and $14,372 for the three months ended March 31, 2023.

Current wording

•Pangaea's TCE rates were $16,223 for the three months ended June 30, 2024 and $15,558 for the three months ended June 30, 2023.

Previous wording

•At the end of the quarter, Pangaea had $95.9 million in cash, and cash equivalents.

Current wording

•At the end of the quarter, Pangaea had $77.9 million in cash, and cash equivalents.

Previous wording

Pangaea’s revenues are derived predominately from voyage, time charters, and terminal and stevedore revenue. Total revenue for the three months ended March 31, 2024 was $104.7 million, compared to $113.7 million for the same period in 2023, a 8% decrease. The decrease in revenues was primarily driven fewer total shipping days. The total shipping days decreased by 7% to 3,685 in the three months ended March 31, 2024, in comparison to 3,958 for the same period in 2023. However, this decrease was partially offset by an increase in terminal and stevedore revenue resulting from the company's acquisition of port and terminal operations in June 2023.

Current wording

Pangaea’s revenues are derived predominately from voyage, time charters, and terminal and stevedore revenue. Total revenue for the three months ended June 30, 2024 was $131.5 million, compared to $118.1 million for the same period in 2023, an 11% increase. The increase in revenues was primarily driven by an increase in voyage days, which rose by 9% to 3,910 for the three months ended June 30, 2024, compared to 3,577 for the same period in 2023. The Company additionally had an increase in terminal and stevedore revenue resulting from the Company's acquisition of port and terminal operations in June 2023. However, this was offset by a significant decrease in charter revenue as a result of a decrease in time charter days of 57%.

Previous wording

Charter revenues increased to $15.0 million from $5.7 million, or 161%, for the three months ended March 31, 2024 compared to the same period in 2023. The increase in charter revenues was due to an increase in time charter days which were up 51% to 855 in the first quarter of 2024 from 566 for the same quarter in 2023 and increased charter hire rates earned. Our flexible chartering strategy enables the Company to selectively release excess ship days, if any, into the market under time charter arrangements rather than voyage days.

Current wording

Charter revenues decreased to $3.8 million from $7.1 million, or 46%, for the three months ended June 30, 2024 compared to the same period in 2023. The decrease in charter revenues was due to a decrease in time charter days which were down 57% to 207 in the second quarter of 2024 from 479 for the same quarter in 2023. This was partially offset by increased charter hire rates earned which increased by approximately 26% from $14,809 per day to $18,593 per day in the second quarter of 2024. Our flexible chartering strategy enables the Company to selectively release excess ship days, if any, into the market under time charter arrangements rather than voyage days.

Previous wording

Voyage expenses were $37.1 million for the three months ended March 31, 2024, compared to $56.8 million for the same period in 2023, a decrease of approximately 35%. The decrease was driven by a 17% decrease in voyage days, leading to corresponding decreases in bunkers consumed and port expenses incurred. Additionally, the total average market price of bunkers consumed decreased by 39.6% for the three months ended March 31, 2024, compared to the same period in 2023. Port expenses decreased approximately 30% compared to the prior year because of the decline in voyage day activity.

Current wording

Voyage expenses were $61.2 million for the three months ended June 30, 2024, compared to $54.5 million for the same period in 2023, an increase of approximately 12%. The increase was driven by a 9% increase in voyage days, leading to corresponding increases in bunkers consumed and port expenses incurred. The total average market price of bunkers consumed increased by 15.8% for the three months ended June 30, 2024, compared to the same period in 2023. Port expenses increased approximately 5% compared to the prior year as a result of the increase in voyage day activity.

Previous wording

Charter hire expenses for the three months ended March 31, 2024 were $27.1 million, compared to $22.6 million for the same period in 2023, a 20% increase. The increase in charter hire expenses was predominantly driven by higher market rates for charter-in vessels, partially offset by a decrease in chartered-in days. Specifically, the average published market rates for Supramax and Panamax vessels increased approximately 41% climbing from an average of $9,702 in the first quarter of 2023 to $13,671 in the same period of 2024. Chartered-in days decreased 14% from 1,778 days in the three months ended March 31, 2023 to 1,535 days for the three months ended March 31, 2024. Charter hire expenses on a per day basis were $17,683 for the three months ended March 31, 2024 and $12,706 for the same period in 2023. The Company's flexible charter-in strategy allows it to supplement its owned fleet with short term chartered-in tonnage at prevailing market prices, when needed, to meet cargo demand.

Current wording

Charter hire expenses for the three months ended June 30, 2024 were $32.7 million, compared to $29.1 million for the same period in 2023, a 12% increase. The increase in charter hire expenses was predominantly driven by higher market rates for charter-in vessels, as well as an increase in chartered-in days. Specifically, the average published market rates for Supramax and Panamax vessels increased approximately 45% climbing from an average of $10,431 in the second quarter of 2023 to $15,104 in the same period of 2024. Chartered-in days increased 3% from 1,915 days in the three months ended June 30, 2023 to 1,971 days for the three months ended June 30, 2024. Charter hire expenses on a per day basis were $16,583 for the three months ended June 30, 2024 and $15,209 for the same period in 2023. The Company's flexible charter-in strategy allows it to supplement its owned fleet with short term chartered-in tonnage at prevailing market prices, when needed, to meet cargo demand.

Previous wording

Vessel operating expenses for the three months ended March 31, 2024 were $12.7 million, compared to $13.6 million for the same period in 2023, a decrease of approximately 7%. The ownership days for the three months ended March 31, 2024 and 2023 were 2,184 and 2,222, respectively, marking a decrease of 2%. The Company owned and operated one fewer ship in the 2024 period. Excluding technical management fees, vessel operating expenses on a per day basis were $5,300 for the three months ended March 31, 2024, compared to $5,632 for the three months ended March 31, 2023. Technical management fees amounted to approximately $1.1 million for the three months ended March 31, 2024 and 2023.

Current wording

Vessel operating expenses for the three months ended June 30, 2024 were $14.7 million, compared to $13.2 million for the same period in 2023, an increase of approximately 12%. The ownership days for the three months ended June 30, 2024 and 2023 were 2,184 and 2,200, respectively, marking a decrease of 1%. The Company owned and operated one fewer ship in the 2024 period. Excluding technical management fees, vessel operating expenses on a per day basis were $6,246 for the three months ended June 30, 2024, compared to $5,517 for the three months ended June 30, 2023. Technical management fees amounted to approximately $1.1 million for the three months ended June 30, 2024 and 2023.

Previous wording

General and administrative expenses were $7.3 million and $5.7 million for the three months ended March 31, 2024, and 2023, respectively. This increase was primarily driven by higher compensation expenses, encompassing non-cash compensation related to equity awards, and the incorporation of port and terminal operations following the Company's acquisition in June 2023.

Current wording

General and administrative expenses were $12.3 million and $11.6 million for the six months ended June 30, 2024 and 2023, respectively. The increase was primarily due to an increase in non-cash compensation associated with equity awards.

Previous wording

The Company assesses risk associated with fluctuating future freight rates and bunker prices, and when appropriate, actively hedges identified economic risk that may impact the operating income of long-term cargo contracts and forward bookings with forward freight agreements and bunkers swaps. The utilization of such derivatives can lead to fluctuations in the Company's reported results from operations on a period-to-period basis as the Company marks these positions to market at the balance sheet date while settlement of the position and execution of the physical transaction may occur at a future date. The Company recognized a mark to market gain on bunker swaps of approximately $2.9 million and on forward freight agreements (FFAs) of approximately $1.8 million in the three months ended March 31, 2024. The fair value gain on interest rate derivative amounted to approximately $0.4 million for the three months ended March 31, 2024. These gains resulted from changes in the fair value of the derivatives at the respective balance sheet dates.

Current wording

The Company assesses risk associated with fluctuating future freight rates and bunker prices, and when appropriate, actively hedges identified economic risk that may impact the operating income of long-term cargo contracts and forward bookings with forward freight agreements and bunkers swaps. The utilization of such derivatives can lead to fluctuations in the Company's reported results from operations on a period-to-period basis as the Company marks these positions to market at the balance sheet date while settlement of the position and execution of the physical transaction may occur at a future date. The Company recognized mark to market gains on bunker swaps of approximately $2.1 million and gains on forward freight agreements (FFAs) of approximately $1.8 million in the six months ended June 30, 2024. The fair value gain on interest rate derivatives was approximately $0.2 million for the six months ended June 30, 2024. These gains resulted from changes in the fair value of the derivatives at the respective balance sheet dates.

Previous wording

The Company concluded that no triggering event had occurred during the first quarter of 2024, which would require impairment testing.

Current wording

The Company concluded that no triggering event had occurred during the first half of 2024, which would require impairment testing.

Previous wording

As of March 31, 2024 and December 31, 2023, the Company had working capital of $96.2 million and $86.5 million, respectively. The increase in working capital was mainly attributed to enhanced operating income generated during the three months ended March 31, 2024.

Current wording

As of June 30, 2024 and December 31, 2023, the Company had working capital of $97.4 million and $86.5 million, respectively. The increase in working capital was mainly attributed to enhanced operating income generated during the six months ended June 30, 2024.

Previous wording

Net cash provided by operating activities during the three months ended March 31, 2024 was $9.0 million compared to net cash provided by operating activities of $11.6 million for the three months ended March 31, 2023. The decrease in cash flows from operating activities compared to the previous year was primarily due to improved income from operations, offset by unfavorable adjustments in the timing of customer receipts and supplier payments.

Current wording

Net cash provided by operating activities during the six months ended June 30, 2024 was $18.0 million compared to net cash provided by operating activities of $13.6 million for the six months ended June 30, 2023. The increase in cash flows from operating activities compared to the previous year was primarily due to improved income from operations.

Previous wording

In addition to vessel acquisitions that the Company may undertake in future periods, its other major capital expenditures include funding its program of regularly scheduled drydockings necessary to make improvements to its vessels, as well as to comply with international shipping standards and environmental laws and regulations. Funding expenses associated with these requirements will be met with cash from operations. The Company anticipates that this process of recertification will require it to reposition these vessels from a discharge port to shipyard facilities, which will reduce the Company’s available days and operating days during that period. The Company capitalized drydocking costs totaling approximately $1.3 million in the three months ended March 31, 2024 and 2023. The Company expensed drydocking costs of approximately $37,000 and $11,000, respectively, in the three months ended March 31, 2024 and 2023.

Current wording

In addition to vessel acquisitions that the Company may undertake in future periods, its other major capital expenditures include funding its program of regularly scheduled drydockings necessary to make improvements to its vessels, as well as to comply with international shipping standards and environmental laws and regulations. Funding expenses associated with these requirements will be met with cash from operations. The Company anticipates that this process of recertification will require it to reposition these vessels from a discharge port to shipyard facilities, which will reduce the Company’s available days and operating days during that period. The Company capitalized drydocking costs totaling approximately $3.2 million in the six months ended June 30, 2024 and 2023. The Company expensed drydocking costs of approximately $141,000 and $90,000, respectively, in the six months ended June 30, 2024 and 2023.