Pangaea Logistics Solutions, Ltd. Q3 FY2025 earnings call

["• Third quarter results were strong, reflecting a seasonally active Arctic trading period and progress against strategic priorities. TCE rates averaged 10% above market indices for relevant vessel types.", "• Integration of 15 Handysize vessels from SSI led to a 22% year-over-year increase in shipping days and adjusted EBITDA of $28.9 million, a ~20% increase from the prior year.", "• Expanded integrated service platform with commencement of operations at Port of Pascagoula (MS), Port of Aransas (TX), and will begin operations in Lake Charles (LA) in Q4. Tampa port expansion delayed due to equipment deliveries but expected early next year.", "• Advanced fleet renewal strategy: sold strategic endeavor, sold Bulk Freedom for $9.6 million, completed purchase of remaining 49% stake in Seamar management, closed financing for strategic spirit and strategic vision totaling $18 million.", "• Maintained disciplined capital allocation, repurchased ~600,000 shares, declared $0.05 quarterly dividend, ended quarter with ~$94 million in unrestricted cash.", "• Near-term dry bulk fundamentals constructive, with resumed agricultural shipments from U.S. to China supporting U.S. Gulf markets and expected shipping demand for West Africa to China dry bulk movements to trickle down to smaller vessels."]

In the third quarter, Pangaea Logistics Solutions delivered strong results. Adjusted EBITDA was $28.9 million, an increase of approximately 20% compared to the prior year. Third quarter TCE rates averaged 10% above the prevailing market for Panamax, Supramax and Handysize indices. Adjusted EBITDA margin increased from 15.7% to 17.1%. Shipping days increased by 22% year-over-year due to the integration of 15 Handysize vessels acquired from SSI. For the fourth quarter, as of today, approximately 1,710 days have been booked at $16,537 per day. Total charter hire expenses decreased by 7% primarily due to a 13% decrease in charter in days, but charter-in cost per day increased by approximately 6% year-over-year. Vessel operating expenses increased by ~57% year-over-year mainly because of the acquisition of the SSI fleet. Total general and administrative expenses increased by 64% due to consolidation of technical management operations, timing of incentive compensation recognition, and growth related to the SSI fleet acquisition.

["• As of today, ~1,710 days have been booked for Q4 2025 at $16,537 per day.", "• Expect premiums in Q4 to likely trend towards normal levels seen in the business during Q4.", "• Fleet renewal in 2026 will depend on opportunities presenting themselves, with a pragmatic approach considering ship age, investment needs, and replacement options."]

["• Actual results may differ significantly from forward-looking statements due to various risks and uncertainties, including those described in periodic reports filed with the SEC.", "• Dry bulk market fluctuations could impact financial performance.", "• Uncertainty regarding asset sale opportunities and their impact on fleet renewal.", "• Changes in financing environment could affect balance sheet flexibility."]

Q: Congratulations on your retirement, Mark. Then, Mads, can you highlight a couple of your priorities going forward?

A: Thanks, Poe. We are focused on executing the strategy, growing the platform by focusing on customers, expanding logistics and ports/terminals offering, and growing the fleet over time with tweaks along the way but nothing revolutionary, just efficient operation and platform growth.

Q: When looking at forward cover over 4,000 days at $17,000, what do you think about the premium to the index in Q4? And about the rate environment for Q4?

A: In terms of Arctic business, some extends into Q4. Q3 had ships completing voyages before repricing and short-term cargo commitments. Q4 isn't done yet, but premiums are expected to likely trend towards normal levels seen in the business in Q4.

Q: You sold another older Supra. Can you talk about your fleet renewal program in the context of asset values and 2026 activity?

A: We have a pragmatic approach. We look at ship age, investment needs vs replacement. We're always looking at fleet renewal opportunities. 2026 fleet renewal will depend on what opportunities present themselves; we're picky about ships we bring in but don't want a shrinking fleet, so fleet renewal is a must.