09-11-2022 Pangaea Logistics hikes dividend and turns another profit in softer market, By Joe Brady, TradeWinds
Rhode Island-based Pangaea Logistics Solutions is rewarding shareholders after turning yet another profit in a weakening third quarter and significantly outperforming market indices. New York-listed Pangaea jumped its dividend to $0.10 per share from $0.075 after it produced an adjusted net income of $23.3m or $0.52 per share. Revenue was $184.5m.
The profit topped an adjusted figure of $21.65m or $0.49 per share in the third quarter of 2021 despite a decline in time charter equivalent (TCE) rates. Revenue fell from the year-ago figure of $213m. The adjusted EPS fell just short of the $0.55 per share figure estimated by Alliance Global Partners analyst Poe Fratt, one of the few analysts following Pangaea.
“Our diverse portfolio of stable, long-term transportation contracts, leading positions in higher-margin ice-class trade routes and improved fleet utilization culminated in a strong third quarter performance, one highlighted by significant year-over-year growth in operating cash flow and adjusted Ebitda,” said Pangaea chief executive Mark Filanowski.
“During the third quarter, all ten of our modern, ice class 1A vessels were active within premium-rate ice trades, contributing to a reported TCE rate that was 41% above the broader market benchmark. While most dry-bulk trades experienced typical levels of seasonal softness during the summer months, demand within our core ice class routes was solid, positioning us to deliver another consecutive quarter of profitability.”
Pangaea’s owned fleet, which now numbers 25 with the August acquisition of the 55,618-dwt Bulk Sachuest (built 2010), earned a TCE average of $24,107, down 16% from the year-ago figure of $28,770 per day. Total shipping days declined 14.2% as the company released chartered-in tonnage in recognition of the declining market. “In a declining market, Pangaea’s flexible business plan turns defensive, with high-cost chartered-in ships redelivered to be later replaced by lower market-cost tonnage to be utilized in the company’s cargo trades,” Pangaea noted.
The enhanced dividend also appeared to reflect confidence in the strength of the company’s balance sheet despite the softer market. “With more than 90% of our long-term debt sitting at a blended fixed rate of less than 5.1%, we are well insulated from a rising interest rate environment,” Filanowski said. “We ended the third quarter with cash and equivalents of $118 million, an increase of nearly $62 million from the beginning of the year.”
Pangaea is a player in niche-market trades with significant barriers to entry and prioritizes cargoes ahead of vessel acquisitions. It has also placed increasing emphasis on its ports and logistics business.