UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________
 
FORM 8-K
CURRENT REPORT
 
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (Date of earliest event reported): November 7, 2019
 
PANGAEA LOGISTICS SOLUTIONS LTD.
(Exact Name of Registrant as Specified in Charter)
 
Bermuda
001-36139
N/A
(State or Other Jurisdiction
(Commission
(IRS Employer
of Incorporation)
File Number)
Identification No.)
 
c/o Phoenix Bulk Carriers (US) LLC
109 Long Wharf, Newport, Rhode Island 02840
(Address of Principal Executive Offices) (Zip Code)
 
(401) 846-7790
(Registrant’s Telephone Number, Including Area Code)

Not Applicable 
(Former Name or Former Address, if Changed Since Last Report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
 
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e 4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock
PANL
NASDAQ

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o





Item 2.02
Results of Operations and Financial Condition.

On November 7, 2019, Pangaea Logistics Solutions Ltd. (“Pangaea” or the “Company”) announced its financial results for the third quarter ended September 30, 2019. The press release is furnished as Exhibit 99.1, its Quarterly Investor Presentation is attached as Exhibit 99.2.

The information contained in, or incorporated into, this Current Report on Form 8-K is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities under that section, nor shall it be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in any such filing.

Item 9.01
Financial Statements and Exhibits.

(d)
Exhibits

The following exhibits are furnished with this report:

Exhibit
Description
 

99.1
Press Release of Pangaea Logistics Solutions Ltd., dated November 7, 2019 Reporting Financial Results for the Three Months Ended September 30, 2019 (furnished pursuant to Item 2.02).

99.2
Investor Presentation of Pangaea Logistics Solutions Ltd. dated November 7, 2019.





SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: November 7, 2019
 
PANGAEA LOGISTICS SOLUTIONS LTD.
 
 
 
By: 
/s/ Gianni Del Signore
 
 
Name: Gianni Del Signore
Title: Chief Financial Officer



Exhibit


Pangaea Logistics Solutions Ltd. Reports Financial Results for the Quarter Ended September 30, 2019
NEWPORT, RI - November 7, 2019 - Pangaea Logistics Solutions Ltd. (“Pangaea” or the “Company”) (NASDAQ: PANL), a global provider of comprehensive maritime logistics solutions, announced today its results for the three months ended September 30, 2019.
3rd Quarter Highlights     

Net income attributable to Pangaea Logistics Solutions Ltd. of approximately $8.3 million for the three months ended September 30, 2019 was in line with the same period last year.
Diluted earnings per share were $0.19 for both three months ended September 30, 2019 and 2018.
Pangaea's TCE rates of $15,915 for the three months ended September 30, 2019 were $2,187 or 16% over comparable market index averages.
Total revenue increased to $118.9 million for the three months ended September 30, 2019, from $95.3 million for the three months ended September 30, 2018.
Adjusted EBITDA increased to $17.7 million for the three months ended September 30, 2019, from $16.6 million for the three months ended September 30, 2018.
At the end of the quarter, Pangaea had $36.7 million in cash, restricted cash and cash equivalents.

Ed Coll, Chief Executive Officer of Pangaea Logistics Solutions, commented:

"The third quarter has historically been a strong quarter for us, and this year was no different. We fully deployed our industry leading ice class capabilities to meet our clients’ needs during the summer arctic shipping season. Our operating fleet expanded from an average of 40 ships in the second quarter to 50 ships in the third quarter. We again pioneered a voyage from the Arctic Circle, completing a breakthrough project in Greenland on one of our ice class ships. Further, through a newly formed joint venture with Hudson Structured Capital Management Ltd., we expanded our ice class capabilities by exercising our options for two additional post-panamax ice class vessels bringing our total newbuilding order to four ships.

In addition to our ice class operations, we moved forward other strategic initiatives that complement our shipping operations and set the course for future logistics projects. We were excited to receive the first cargo shipment to our new terminal operation in Brayton Point, and the award of a contract to perform stevedoring operations at our customer’s port terminal in the Mississippi River. We also took delivery of a new vessel, Bulk Friendship, during the quarter and after the quarter end we agreed to sell two older ships, Bulk Patriot and Bulk Juliana, re-balancing our owned/chartered-in fleet ratios and reducing our average fleet age, while adding cash to be invested in our newbuilding program.

Collectively these actions are central to our growth strategy as we focus on niches where we can add value, extend services to support our customer base, and develop cargo opportunities. As we publish our results, the market buoyancy seen in the summer is extending into fall. Hopefully, positive macroeconomic impacts will continue to strengthen bulk markets. IMO 2020 impacts on the market remain somewhat concerning, but we believe we are in good shape without having committed to significant outlays for scrubber technology."


Results for the three months ended September 30, 2019 and 2018
Total revenue was $118.9 million for the three months ended September 30, 2019, compared with $95.3 million for the three months ended September 30, 2018. The total number of shipping days performed increased by 12% to 4,636, compared to 4,157 days during the third quarter of 2018.
The average TCE rate achieved was $15,915 per day for the three months ended September 30, 2019, compare to an average of $14,111 per day for the same period in 2018. The achieved premium over the average market increased by $2,187 per day or 16% for the three months ended September 30, 2019, from $2,716 per day or 24% for the three months ended September 30, 2018. The total number of shipping days increased 12% to 4,636 in the three months ended September 30, 2019, compared to 4,157 for the same period in 2018, predominantly due to the increase in voyage days. Net income held relatively steady at $8.3 million for both three months ended September 30, 2019 and 2018.






Liquidity and Cash Flows
Cash, restricted cash and cash equivalents were $36.7 million as of September 30, 2019, compared with $56.1 million on December 31, 2018.
At September 30, 2019 and December 31, 2018, the Company had working capital of $23.7 million and $34.5 million, respectively. For the nine months ended September 30, 2019, the Company’s net cash provided by operating activities was $23.4 million, compared to $27.2 million for the nine months ended September 30, 2018.
For the nine months ended September 30, 2019 and 2018, net cash used in investing activities was $48.2 million and $15.0 million, respectively. Net cash provided by financing activities was $5.3 million and $2.5 million, respectively, for the nine months ended September 30, 2019 and 2018. These changes reflect the Company’s investment in newbuilding vessels, and the purchase of second hand vessels, including the m/v Bulk Spirit and m/v Bulk Friendship which were financed under the finance lease arrangements and the m/v Bulk Independence which was financed under a commercial loan facility. The financing activities also include a dividend paid to our joint venture partners of $ 4.7 million and dividends paid to the common stockholders of $5.2 million.
Subsequent Events
In October 2019 the Company entered into separate agreements to sell the 2001-built vessel Bulk Juliana for a sale price of $6.5 million, and the 1996-built vessel Bulk Patriot for a sale price of $4.5 million. The Company expects to deliver the vessels to their new owners in November and December 2019, respectively. The sale of these two debt free vessels will generate cash flow of approximately $11 million, and will result in a book loss on sale of approximately $8.6 million in the fourth quarter.
Conference Call Details
The Company’s management team will host a conference call to discuss the Company’s financial results on November 8, 2019 at 8:00 a.m., Eastern Time (ET). To access the conference call, please dial (888) 895-3561 (domestic) or (904) 685-6494 (international) approximately ten minutes before the scheduled start time and reference ID#6638359
A supplemental slide presentation will accompany this quarter’s conference call and can be found attached to the Current Report on Form 8-K that the Company filed concurrently with this press release. This document will be available at http://www.pangaeals.com/company-filings or at sec.gov.
A recording of the call will also be available for two weeks and can be accessed by calling (800) 585-8367 (domestic) or (404) 537-3406 (international) and referencing ID#6638359.





Pangaea Logistics Solutions Ltd.
Consolidated Statements of Income
(unaudited)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
Revenues:
 
 
 
 
 
 
 
Voyage revenue
$
103,806,391

 
$
81,812,543

 
$
247,087,805

 
$
233,979,386

Charter revenue
15,079,005

 
13,532,296

 
34,632,391

 
37,161,948

 
118,885,396

 
95,344,839

 
281,720,196

 
271,141,334

Expenses:
 
 
 
 
 
 
 
Voyage expense
45,102,602

 
36,684,994

 
114,501,121

 
104,880,511

Charter hire expense
41,980,065

 
28,532,774

 
85,244,779

 
81,912,601

Vessel operating expense
11,331,770

 
9,863,944

 
32,160,692

 
29,759,818

General and administrative
2,768,253

 
3,704,360

 
12,160,924

 
12,211,329

Depreciation and amortization
4,652,563

 
4,410,977

 
13,521,078

 
13,140,234

Loss on sale and leaseback of vessels

 

 

 
860,426

Total expenses
105,835,253

 
83,197,049

 
257,588,594

 
242,764,919

 
 
 
 
 
 
 
 
Income from operations
13,050,143

 
12,147,790

 
24,131,602

 
28,376,415

 
 
 
 
 
 
 
 
Other (expense)/income:
 
 
 

 
 
 
 
Interest expense, net
(2,499,617
)
 
(2,231,589
)
 
(6,807,837
)
 
(6,384,314
)
Interest expense on related party debt
(10,902
)
 
(43,961
)
 
(48,938
)
 
(161,334
)
Unrealized (loss)/gain on derivative instruments, net
(301,058
)
 
486,412

 
2,203,899

 
477,508

Other income
180,194

 
38,481

 
580,106

 
496,813

Total other expense, net
(2,631,383
)
 
(1,750,657
)
 
(4,072,770
)
 
(5,571,327
)
 
 
 
 
 
 
 
 
Net income
10,418,760

 
10,397,133

 
20,058,832

 
22,805,088

Income attributable to non-controlling interests
(2,097,200
)
 
(2,120,182
)
 
(4,002,217
)
 
(4,430,120
)
Net income attributable to Pangaea Logistics Solutions Ltd.
$
8,321,560

 
$
8,276,951

 
$
16,056,615

 
$
18,374,968

 
 
 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
 
 
Basic
$
0.19

 
$
0.20

 
$
0.38

 
$
0.44

Diluted
$
0.19

 
$
0.19

 
$
0.37

 
$
0.43

 
 
 
 
 
 
 
 
Weighted average shares used to compute earnings per common share:
 
 
 
 
 
 
 
Basic
42,817,933

 
42,348,175

 
42,729,775

 
42,208,038

Diluted
43,354,742

 
42,878,449

 
43,247,417

 
42,727,481







Pangaea Logistics Solutions Ltd.
Consolidated Balance Sheets

 
September 30, 2019
 
December 31, 2018
 
(unaudited)
 
 
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
34,171,062

 
$
53,614,735

Accounts receivable (net of allowance of $1,823,293 at
September 30, 2019 and $2,357,130 at December 31, 2018)
29,221,444

 
28,481,787

Bunker inventory
17,002,101

 
19,222,087

Advance hire, prepaid expenses and other current assets
27,998,143

 
12,187,551

Total current assets
108,392,750

 
113,506,160

 
 
 
 
Restricted cash
2,500,000

 
2,500,000

Fixed assets, net
311,728,339

 
281,355,366

Investment in newbuildings in-process
7,691,522

 

Finance lease right of use assets, net
54,239,752

 
56,113,096

Total assets
$
484,552,363

 
$
453,474,622

 
 
 
 
Liabilities and stockholders' equity
 
 
 
Current liabilities
 
 
 
Accounts payable, accrued expenses and other current liabilities
$
35,975,324

 
$
31,897,507

Related party debt
1,196,683

 
2,877,746

Deferred revenue
14,297,237

 
14,717,072

Current portion of secured long-term debt
23,740,674

 
20,127,742

Current portion of finance lease liabilities
7,568,888

 
5,364,963

Dividend payable
1,921,622

 
4,063,598

Total current liabilities
84,700,428

 
79,048,628

 
 
 
 
Secured long-term debt, net
88,561,552

 
95,374,270

Finance lease liabilities
64,402,040

 
45,684,727

 
 
 
 
Commitments and contingencies (Note 7)
 
 
 
 
 
 
 
Stockholders' equity:
 
 
 
Preferred stock, $0.0001 par value, 1,000,000 shares authorized and no shares issued or outstanding

 

Common stock, $0.0001 par value, 100,000,000 shares authorized; 44,451,940 shares issued and outstanding at September 30, 2019; 43,998,560 shares issued and outstanding at December 31, 2018
4,445

 
4,400

Additional paid-in capital
157,176,223

 
155,946,452

Retained earnings
18,693,177

 
5,737,199

Total Pangaea Logistics Solutions Ltd. equity
175,873,845

 
161,688,051

Non-controlling interests
71,014,498

 
71,678,946

Total stockholders' equity
246,888,343

 
233,366,997

Total liabilities and stockholders' equity
$
484,552,363

 
$
453,474,622







Pangaea Logistics Solutions Ltd.
Consolidated Statements of Cash Flows
(unaudited)

 
Nine Months Ended September 30,
 
2019
 
2018
Operating activities
 
 
 
Net income
$
20,058,832

 
$
22,805,088

Adjustments to reconcile net income to net cash provided by operations:
 

 
 
Depreciation and amortization expense
13,521,078

 
13,140,234

Amortization of deferred financing costs
538,427

 
517,085

Amortization of prepaid rent
88,948

 
91,453

Unrealized gain on derivative instruments
(2,203,899
)
 
(477,508
)
Gain from equity method investee
(416,435
)
 
(90,000
)
Provision for doubtful accounts
(47,351
)
 
(104,288
)
Loss on sale of vessel

 
860,426

Drydocking costs
(1,561,689
)
 
(1,497,979
)
Recognized cost for restricted stock issued as compensation
1,365,968

 
1,064,520

Change in operating assets and liabilities:
 
 
 
Accounts receivable
(692,306
)
 
(5,632,597
)
Bunker inventory
2,219,986

 
(5,506,843
)
Advance hire, prepaid expenses and other current assets
(15,220,967
)
 
713,646

Accounts payable, accrued expenses and other current liabilities
6,171,148

 
873,337

Deferred revenue
(419,835
)
 
468,333

Net cash provided by operating activities
23,401,905

 
27,224,907

 
 
 
 
Investing activities
 

 
 

Purchase of vessels and vessel improvements
(40,201,356
)
 
(14,695,391
)
Purchase of fixed assets and equipment
(293,385
)
 
(341,439
)
Proceeds from sale of equipment

 
31,594

Net cash used in investing activities
(48,186,263
)
 
(15,005,236
)
 
 
 
 
Financing activities
 
 
 
Proceeds from long-term debt
14,000,000

 

Payments of related party debt
(1,681,063
)
 
(3,308,265
)
Payments of financing fees and issuance costs
(646,538
)
 
(702,666
)
Payments of long-term debt
(17,343,675
)
 
(16,855,738
)
Proceeds from finance leases
25,600,000

 
27,750,000

Dividends paid to non-controlling interests
(4,666,665
)
 
(904,803
)
Payments of finance lease obligations
(4,678,761
)
 
(2,177,959
)
Accrued common stock dividends paid
(5,242,613
)
 
(1,135,000
)
Cash paid for incentive compensation shares relinquished

 
(101,075
)
Proceeds from private placement of common stock, net of issuance costs

 
(50,812
)
Net cash provided by financing activities
5,340,685

 
2,513,682

 
 
 
 
Net (decrease) increase in cash, cash equivalents and restricted cash
(19,443,673
)
 
14,733,353

Cash, cash equivalents and restricted cash at beginning of period
56,114,735

 
38,531,812

Cash, cash equivalents and restricted cash at end of period
$
36,671,062

 
$
53,265,165

Supplemental cash flow information and disclosure of noncash items
 
 
 
Cash and cash equivalents
$
34,171,062

 
$
50,765,165

Restricted cash
2,500,000

 
2,500,000

 
$
36,671,062

 
$
53,265,165







Pangaea Logistics Solutions Ltd.
Reconciliation of Non-GAAP Measures
(unaudited)

 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2019
 
2018
 
2019
 
2018
Net Revenue
 
 
 
 
 
 
 
 
Income from operations
 
$
13,050,143

 
$
12,147,790

 
$
24,131,602

 
$
28,376,415

General and administrative
 
2,768,253

 
3,704,360

 
12,160,924

 
12,211,329

Depreciation and amortization
 
4,652,563

 
4,410,977

 
13,521,078

 
13,140,234

Net Revenue
 
$
20,470,959

 
$
20,263,127

 
$
49,813,604

 
$
54,588,404

 
 
 
 
 
 
 
 
 
Adjusted EBITDA
 
 
 
 
 
 
 
 
Income from operations
 
$
13,050,143

 
$
12,147,790

 
$
24,131,602

 
$
28,376,415

Depreciation and amortization
 
4,652,563

 
4,410,977

 
13,521,078

 
13,140,234

Loss on sale and leaseback of vessel
 

 

 

 
860,426

Adjusted EBITDA
 
$
17,702,706

 
$
16,558,767

 
$
37,652,680

 
$
42,377,075


INFORMATION ABOUT NON-GAAP FINANCIAL MEASURES. As used herein, “GAAP” refers to accounting principles generally accepted in the United States of America. To supplement our consolidated financial statements prepared and presented in accordance with GAAP, this earnings release discusses non-GAAP financial measures, including non-GAAP net revenue and non-GAAP adjusted EBITDA. This is considered a non-GAAP financial measure as defined in Rule 101 of Regulation G promulgated by the Securities and Exchange Commission. Generally, a non-GAAP financial measure is a numerical measure of a company’s historical or future performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

We use non-GAAP financial measures for internal financial and operational decision making purposes and as a means to evaluate period-to-period comparisons of the performance and results of operations of our core business. Our management believes that non-GAAP financial measures provide meaningful supplemental information regarding the performance of our core business by excluding charges that are not incurred in the normal course of business. Non-GAAP financial measures also facilitate management's internal planning and comparisons to our historical performance and liquidity. We believe certain non-GAAP financial measures are useful to investors as they allow for greater transparency with respect to key metrics used by management in its financial and operational decision making and are used by our institutional investors and the analyst community to help them analyze the performance and operational results of our core business.

Net revenue. Net revenue represents total revenue less the total direct costs of transportation and services, which includes charter hire, voyage and vessel operating expenses. Net revenue is included because it is used by management and certain investors to measure performance by comparison to other logistic service providers. Net revenue is not an item recognized by the generally accepted accounting principles in the United States of America, or U.S. GAAP, and should not be considered as an alternative to net income, operating income, or any other indicator of a company's operating performance required by U.S. GAAP. Pangaea’s definition of net revenue used here may not be comparable to an operating measure used by other companies.

Adjusted EBITDA and adjusted EPS. Adjusted EBITDA represents income or loss from operations before depreciation, amortization and, when applicable, loss on sale and leaseback of vessel, loss on impairment of vessels and certain non-recurring income and/or expense. Earnings per share represents net income divided by the weighted average number of common shares outstanding on a diluted basis. Adjusted earnings per share represents net income attributable to Pangaea Logistics Solutions Ltd. plus, when applicable, loss on sale and leaseback of vessel, loss on impairment of vessel and certain non-recurring income and/or expenses, divided by the weighted average number of shares of common stock on a diluted basis.

There are limitations related to the use of net revenue versus income from operations, adjusted EBITDA versus income from operations, and adjusted EPS versus EPS calculated in accordance with GAAP. In particular, Pangaea’s definition of adjusted EBITDA used here are not comparable to EBITDA.






The table set forth above provides a reconciliation of the non-GAAP financial measures presented during the period to the most directly comparable financial measures prepared in accordance with GAAP.

About Pangaea Logistics Solutions Ltd.

Pangaea Logistics Solutions Ltd. (NASDAQ: PANL) provides logistics services to a broad base of industrial customers who require the transportation of a wide variety of dry bulk cargoes, including grains, pig iron, hot briquetted iron, bauxite, alumina, cement clinker, dolomite, and limestone. The Company addresses the transportation needs of its customers with a comprehensive set of services and activities, including cargo loading, cargo discharge, vessel chartering, and voyage planning. Learn more at www.pangaeals.com.



Investor Relations Contacts

Sean Silva
Prosek Partners
646 493 9632
ssilva@prosek.com

Tom Rozycki
Prosek Partners
646 818 9208
trozycki@prosek.com

Forward-Looking Statements

Certain statements in this press release are “forward-looking statements” within the meaning of the Private Securities Litigation Act of 1995. These forward-looking statements are based on our current expectations and beliefs and are subject to a number of risk factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The Company disclaims any obligation to publicly update or revise these statements whether as a result of new information, future events or otherwise, except as required by law. Such risks and uncertainties include, without limitation, the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand for dry bulk shipping capacity, changes in our operating expenses, including bunker prices, dry-docking and insurance costs, the market for our vessels, availability of financing and refinancing, charter counterparty performance, ability to obtain financing and comply with covenants in such financing arrangements, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, vessels breakdowns and instances of off-hires and other factors, as well as other risks that have been included in filings with the Securities and Exchange Commission, all of which are available at www.sec.gov.


q32019investorpresentati
THIRD QUARTER 2019 EARNINGS CONFERENCE CALL PRESENTATION 1


 
SAFE HARBOR This presentation includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding future financial performance, future growth and future acquisitions. These statements are based on Pangaea’s and managements’ current expectations or beliefs and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements herein due to changes in economic, business, competitive and/or regulatory factors, and other risks and uncertainties affecting the operation of Pangaea’s business. These risks, uncertainties and contingencies include: business conditions; weather and natural disasters; changing interpretations of GAAP; outcomes of government reviews; inquiries and investigations and related litigation; continued compliance with government regulations; legislation or regulatory environments; requirements or changes adversely affecting the business in which Pangaea is engaged; fluctuations in customer demand; management of rapid growth; intensity of competition from other providers of logistics and shipping services; general economic conditions; geopolitical events and regulatory changes; and other factors set forth in Pangaea’s filings with the Securities and Exchange Commission and the filings of its predecessors. The information set forth herein should be read in light of such risks. Further, investors should keep in mind that certain of Pangaea’s financial results are unaudited and do not conform to SEC Regulation S-X and as a result such information may fluctuate materially depending on many factors. Accordingly, Pangaea’s financial results in any particular period may not be indicative of future results. Pangaea is not under any obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise. 2


 
BUSINESS HIGHLIGHTS Q3-2019 Results •Adjusted EBITDA of $17.7 million Consistent •Net income of $8.3 million •$36.7 million cash, restricted cash and cash Performance equivalents Fleet Working Fleet •22 drybulk ships and one barge in owned and controlled fleet Operations Extensive and varied •Operating 50 vessels on average during Q3-2019 •7.4 million tons carried; 122 voyages performed experience for 49 clients 1) Adjusted EBITDA is a non-GAAP measure and represents income or loss from operations before depreciation and amortization, loss on sale and leaseback of vessel, and when applicable, loss on impairment of vessels and certain non-recurring items. 3


 
DRIVERS OF PERFORMANCE Customer Focus: Long-term, fixed contract employment and recurring business with new and longstanding customers Targeted Business: Specialty tonnage provides superior returns – 16% premium over average market rates in Q3 – 2019 Rate Environment: The Baltic Dry Index average increased quarter over quarter. Baltic Dry Index (1) 2500 2000 1500 1000 500 0 (1) Per reported indices 4


 
FINANCIAL HIGHLIGHTS • Net income attributable to Pangaea Logistics Solutions Ltd. of approximately $8.3 million for the three months ended September 30, 2019 was in line with the same period last year. • Diluted earnings per share were $0.19 for both three months ended September 30, 2019 and 2018. • Pangaea's TCE rates of $15,915 for the three months ended September 30, 2019 were $2,187 or 16% over comparable market index averages. • Total revenue increased to $118.9 million for the three months ended September 30, 2019, from $95.3 million for the three months ended September 30, 2018. • Adjusted EBITDA increased to $17.7million for the three months ended September 30, 2019, from $16.6 million for the three months ended September 30, 2018. • At the end of the quarter, Pangaea had $36.7 million in cash, restricted cash and cash equivalents. 5


 
SELECTED INCOME STATEMENT DATA (in thousands) Three months ended September 30, Nine months ended September 30, 2019 2018 2019 2018 (unaudited) (unaudited) (unaudited) (unaudited) Revenues: Voyage revenue $ 103,806 $ 81,813 $ 247,088 $ 233,979 Charter revenue 15,079 13,532 34,632 37,162 118,885 95,345 281,720 271,141 Expenses: Voyage expense 45,103 36,685 114,501 104,881 Charter hire expense 41,980 28,533 85,245 81,913 Vessel operating expenses 11,332 9,864 32,161 29,760 General and administrative 2,768 3,704 12,161 12,211 Depreciation and amortization 4,653 4,411 13,521 13,140 Loss on sale and leaseback of vessels - - - 860 Total expenses 105,835 83,197 257,589 242,765 Income from operations 13,050 12,148 24,132 28,376 Total other income (expense), net (2,631) (1,751) (4,073) (5,571) Net income 10,419 10,397 20,059 22,805 Income attributable to noncontrolling interests (2,097) (2,120) (4,002) (4,430) Net income attributable to Pangaea Logistics Solutions Ltd. $ 8,322 $ 8,277 $ 16,057 $ 18,375 Adjusted EBITDA (1) $ 17,703 $ 16,559 $ 37,653 $ 42,377 1) Adjusted EBITDA is a non-GAAP measure and represents income or loss from operations before depreciation and amortization, loss on sale and leaseback of vessel, and when applicable, loss on impairment of vessels and certain non-recurring items. 6


 
SELECTED BALANCE SHEET & CASH FLOW DATA (in thousands) September 30, 2019 December 31, 2018 Current Assets Cash and cash equivalents $ 34,171 $ 53,615 Accounts receivable, net 29,221 28,482 Other current assets 45,000 31,410 Total current assets 108,393 113,506 Restricted cash 2,500 2,500 Fixed assets, including finance lease right of use assets, net 365,968 337,468 7,692 - Total assets$ 484,552 $ 453,475 Current liabilities Accounts payable, accrued expenses and other current liabilities $ 35,975 $ 31,898 Related party debt 1,197 2,878 Current portion long-term debt and finance lease liabilities 31,310 25,493 Other current liabilities 16,219 18,781 Total current liabilties 84,700 79,049 Secured long-term debt and finance lease liabilities, net 152,964 141,059 Total Pangaea Logistics Solutions Ltd. equity 175,874 161,688 Non-controlling interests 71,014 71,679 Total stockholders' equity 246,888 233,367 Total liabilities and stockholders' equity$ 484,552 $ 453,475 Cash flows for the years ended: September 30, 2019 September 30, 2019 Net cash provided by operating activities $ 23,402 $ 27,225 Net cash used in investing activities $ (48,186) $ (15,005) Net cash provided by financing activities $ 5,341 $ 2,514 The amounts in the table below have been calculated based on unrounded numbers. Accordingly, certain amounts may not sum due to the effect of rounding. 7


 
TOTAL SHIPPING DAYS 6,000 5,000 4,000 3,461 2,750 3,000 2,645 2,537 2,556 Days 2,220 1,742 1,904 2,000 1,000 1,820 1,886 1,575 1,620 1,638 1,703 1,731 1,718 - Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Owned Days Charter-in Days Capital Efficiency: Leveraged owned fleet by chartering-in market vessels Flexibility: Short-term charters allow us to react quickly and take advantage of arbitrage opportunities 8


 
PANGAEA TCE v. AVERAGE MARKET TCE $18,000 16% $16,000 24% 30% 32% 21% $2,187 $14,000 49% 15% $2,801 $2,440 68% $12,000 $3,187 $3,355 $1,605 $4,268 $10,000 $4,869 $8,000 $13,728 $6,000 $11,395 $11,559 $10,905 $10,662 $10,373 $4,000 $8,665 $7,160 $2,000 $- Q4 - 2017 Q1 - 2018 Q2 - 2018 Q3 - 2018 Q4 - 2018 Q1-2019 Q2-2019 Q3-2019 Pangaea TCE $12,510 $13,849 $13,728 $13,835 $14,360 $12,029 $12,933 $15,915 Consistently outperforming against average Panamax and Supramax index *Average of the published Panamax and Supramax index net of commission 9


 
FINANCIAL PERFORMANCE Q4-2017 THROUGH Q3-2019 ADJUSTED EBITDA(1) TCE (2) 20,000,000 $18,000 18,000,000 $16,000 16,000,000 $14,000 14,000,000 $12,000 12,000,000 $10,000 10,000,000 $8,000 8,000,000 $6,000 6,000,000 4,000,000 $4,000 2,000,000 $2,000 - $- Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 1) Adjusted EBITDA is a non-GAAP measure and represents income or loss from operations before depreciation and amortization, loss on sale and leaseback of vessels, and when applicable, loss on impairment of vessels and certain non-recurring items. 2) TCE is defined as total revenues less voyage expenses divided by the number of shipping days, which is consistent with industry standards. TCE rate is a common shipping industry performance measure used primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charter hire rates for vessels on voyage charters are generally not expressed in per-day amounts while charter hire rates for vessels on time charters generally are expressed in per-day amounts. 10


 
ADJUSTED EARNINGS PER COMMON SHARE Adjusted EPS total of $0.67 since Q3 2018 Adjusted EPS (1) 0.25 0.20 0.15 0.10 0.05 - Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 (1) Adjusted earnings per share represents net income attributable to Pangaea Logistics Solutions Ltd. plus, when applicable, loss on sale and leaseback of vessel, loss on impairment of vessel, gains and losses on derivative instruments, and certain non-recurring charges, divided by the weighted average number of shares of common stock. 11