Pangaea Logistics Solutions(PANL) - 2025 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements The unaudited consolidated financial statements for Q1 2025 show total revenue increased to $122.8 million, but higher operating expenses led to a net loss of $2.2 million, reversing the prior year's net income Consolidated Financial Statements Q1 2025 saw a net loss of $2.0 million attributable to Pangaea, a significant downturn from Q1 2024's net income, driven by increased operating expenses despite 17% revenue growth Q1 2025 vs Q1 2024 Statement of Operations Highlights | Metric | Q1 2025 (unaudited) | Q1 2024 (unaudited) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $122.8M | $104.7M | +17.2% | | Total Expenses | $119.9M | $93.7M | +27.9% | | Income from Operations | $2.9M | $11.0M | -73.5% | | Net (Loss) Income | ($2.2M) | $12.7M | -117.4% | | Net (Loss) Income Attributable to Pangaea | ($2.0M) | $11.7M | -117.0% | | Diluted (Loss) Earnings Per Share | ($0.03) | $0.25 | -112.0% | Balance Sheet Summary | Metric | March 31, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $63.9M | $86.8M | | Total current assets | $175.9M | $192.0M | | Total assets | $918.0M | $936.5M | | Total current liabilities | $109.0M | $109.1M | | Total stockholders' equity | $467.2M | $474.7M | Q1 2025 vs Q1 2024 Cash Flow Summary | Metric | Q1 2025 (unaudited) | Q1 2024 (unaudited) | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($4.4M) | $9.0M | | Net cash used in investing activities | ($0.5M) | ($0.2M) | | Net cash used in financing activities | ($18.0M) | ($12.0M) | | Net change in cash and cash equivalents | ($22.9M) | ($3.2M) | Notes to Consolidated Financial Statements Notes detail operations, accounting policies, and financial position, including a 41-vessel fleet, $386.7 million in debt, covenant compliance, and a $0.05 per share dividend declared post-quarter - As of March 31, 2025, the company's owned fleet comprises 41 drybulk vessels (including those from the December 2024 Strategic Shipping merger) and one barge. This includes vessels held through its two-thirds ownership in Nordic Bulk Holding Company Ltd. (NBHC)[21][22][47] - The company was in compliance with all financial covenants for its debt and financing obligations as of March 31, 2025[53][56] - On May 8, 2025, the Board of Directors declared a quarterly cash dividend of $0.05 per share and authorized a new share repurchase program for up to $15.0 million of the company's common stock[84][85] - The company's accounts receivable balance includes a concentration of credit risk, with one significant customer comprising 29% of the total as of March 31, 2025[26] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the Q1 2025 net loss to challenging market conditions, including a 39% lower BDI, despite 17% revenue growth driven by fleet expansion, offset by surging operating expenses Industry Overview and Key Metrics Q1 2025 saw dry bulk industry headwinds with a 39% BDI decrease, yet the company's $11,390 TCE rate outperformed market averages by 33% due to strategic contracts and fleet expansion Market Index Performance (Q1 2025 vs Q1 2024) | Metric | Q1 2025 Average | Q1 2024 Average | Change | | :--- | :--- | :--- | :--- | | Baltic Dry Index (BDI) | 1,118 | 1,824 | -39% | | Panamax, Supramax, Handysize Rates | $8,548 | $13,671 | -37% | - The company's achieved TCE rate for Q1 2025 was $11,390, a 36% decrease from $17,697 in Q1 2024, but it outperformed the average market rates by approximately 33%[107] - Operating results were significantly impacted by a fleet expansion at the end of 2024, which added 15 vessels and increased owned shipping days by 1,275 in Q1 2025 compared to Q1 2024[105] Results of Operations Q1 2025 total revenue increased 17% to $122.8 million due to higher shipping days, but operating expenses, particularly voyage and vessel operating costs, surged significantly, while charter hire expenses decreased Revenue Breakdown (Q1 2025 vs Q1 2024) | Revenue Type | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Voyage Revenues | $109.7M | $87.3M | +26% | | Charter Revenues | $10.0M | $15.0M | -34% | | Terminal & Stevedore | $3.1M | $2.4M | +30% | | Total Revenue | $122.8M | $104.7M | +17% | Key Expense Breakdown (Q1 2025 vs Q1 2024) | Expense Type | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Voyage Expenses | $60.3M | $37.1M | +62% | | Charter Hire Expenses | $17.6M | $27.1M | -35% | | Vessel Operating Expenses | $22.2M | $12.7M | +75% | - The increase in voyage revenue was driven by a 48% increase in voyage days (4,196 vs 2,830), resulting from the fleet expansion[110] - The decrease in charter hire expense was driven by a 37% decline in average market rates for chartered-in vessels, despite a 14% increase in chartered-in days[116] Liquidity and Capital Resources Working capital decreased to $66.9 million as of March 31, 2025, with Q1 2025 experiencing a $4.4 million net cash outflow from operations and increased financing activities, including $6.4 million in drydocking costs Working Capital | Date | Working Capital | | :--- | :--- | | March 31, 2025 | $66.9 million | | December 31, 2024 | $82.9 million | Cash Flow Summary (in millions) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Operating Activities | ($4.4) | $9.0 | | Investing Activities | ($0.5) | ($0.2) | | Financing Activities | ($18.0) | ($12.0) | - Capitalized drydocking costs were a major capital expenditure, totaling approximately $6.4 million in Q1 2025, compared to $1.3 million in Q1 2024[130] Quantitative and Qualitative Disclosures about Market Risks No significant changes to the company's market risk profile were reported since December 31, 2024, with further details available in the Annual Report on Form 10-K - There have been no significant changes to the company's market risk profile since December 31, 2024[133] Controls and Procedures Disclosure controls and procedures were deemed ineffective as of March 31, 2025, due to a material weakness in internal control over financial reporting related to ASC 606 revenue recognition, with remediation efforts underway - The CEO and CFO concluded that disclosure controls and procedures were not effective as of March 31, 2025, due to a previously identified material weakness in internal control over financial reporting[134] - The material weakness relates to the design and documentation of controls over the review and application of the revenue recognition policy under ASC 606[134] - Remediation actions were implemented in Q1 2025, including enhanced review procedures for revenue recognition, but the material weakness is not yet considered fully remediated[135] PART II - OTHER INFORMATION Legal Proceedings The company is involved in various ordinary course legal disputes, primarily cargo claims, which are not expected to materially impact financial position or results - The company is subject to various legal disputes, mainly cargo claims, which are considered part of the ordinary course of business[137] Risk Factors No material changes to previously disclosed risk factors were reported, with comprehensive details available in the Annual Report on Form 10-K for December 31, 2024 - The report refers to the Risk Factors section of the Annual Report on Form 10-K for the year ended December 31, 2024, for a comprehensive discussion of potential risks[138] Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities were reported during the period - None Defaults upon Senior Securities No defaults upon senior securities were reported during the period - None Mine Safety Disclosures This item is not applicable to the company - None Other Information No other information required for disclosure under this item was reported - None Exhibits The report lists filed exhibits, including CEO and CFO certifications under the Sarbanes-Oxley Act and XBRL instance documents - Exhibits filed with the report include certifications from the Chief Executive Officer and Chief Financial Officer as required by the Sarbanes-Oxley Act[143]