EX-99.1 2 q22016pressrelease.htm EXHIBIT 99.1 PRESS RELEASE
Pangaea Logistics Solutions Ltd. Reports Financial Results for the Quarter Ended June 30, 2016
Pangaea announces positive earnings and cash flow
NEWPORT, RI - August 15, 2016 - 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 June 30, 2016.
Second Quarter Highlights

• | Net income attributable to Pangaea Logistics Solutions Ltd. was $0.1 million, compared to net income of $5.5 million in the second quarter of 2015

• | Pro forma adjusted earnings per common share 1 of $0.004 for 2016 compared to pro forma adjusted earnings per common share of $0.15 in the second quarter of 2015

• | Adjusted EBITDA 2 decreased to $4.3 million for 2016, compared with $10.3 million for the second quarter of 2015

• | Cash flow from operations was $10.0 million for the six months ended June 30, 2016, compared with $12.8 million for the six months ended June 30, 2015

• | At the end of the second quarter, Pangaea had $32.4 million in cash and cash equivalents

• | General and administrative expenses decreased 25% to $2.9 million from $3.9 million in the second quarter of 2015.

Edward Coll, Chairman and Chief Executive Officer of Pangaea Logistics Solutions, commented, “This quarter saw us continue to use our unique business model, coupled with rigorous expense management, to remain profitable in the face of a very difficult shipping market. Despite the ongoing challenges presented by the declining growth in demand for the cargoes we carry, combined with too many ships on the water, we have maintained a healthy balance sheet and generated positive cash flow from our operations. This is a testament to both our strategy and our world class team.”
Results for the Three Months Ended June 30, 2016 and 2015
For the three months ended June 30, 2016, the Company reported net income of $0.1 million, or $0.004 per common share compared to net income of $5.5 million, or $0.15 per common share for the same period of 2015.
Adjusted EBITDA was $4.3 million in the three months ended June 30, 2016 and $10.3 million for the three months ended June 30, 2015. The change was primarily attributable to the continued weakness in the drybulk shipping market and to the reduction in the TCE rate attributable to the amended COA that employs three of the Company's vessels on a continuous basis. Pangaea’s strategy of relying on COAs and minimizing risks associated with falling market rates by chartering vessels into our fleet only as necessary to perform under the COAs and firm contracts has continued to serve the Company well. This flexible fleet strategy reduces the risk of idle time in an environment with limited profitable fronthaul employment.
Total revenue for the three months ended June 30, 2016 declined 13% to $57.0 million from $65.1 million in 2015. This decline in total revenue was primarily attributable to the weak market.

1 Earnings per share represents total earnings allocated to common stock divided by the weighted average number of common shares outstanding. Pro forma adjusted earnings per share represents adjusted total earnings allocated to common stock divided by the weighted average number of shares. See Reconciliation of Adjusted EBITDA and Pro Forma Adjusted Earnings Per Share.
2 Adjusted EBITDA is a non-GAAP measure and represents operating earnings before interest expense, income taxes, depreciation and amortization, and other non-operating income and/or expense, if any. See Reconciliation of Adjusted EBITDA and Pro Forma Adjusted Earnings Per Share.

Markets
Mr. Coll noted, "Although rates have improved slightly from earlier this year the market continues to be very challenged. While we are optimistic that the market has bottomed and begun to rationalize, the timing of a recovery remains impossible to predict. Beyond the already difficult dry bulk market fundamentals, macroeconomic and geopolitical uncertainty and shocks such as Brexit continue to be headwinds. However, thanks to our financial strength, unique expertise in less-commoditized trades and deep relationships with customers, financial sponsors, and other stakeholders, we have been able to continue to selectively grow our business. We are confident these steps will not only produce results in the near-term, but will also be rewarded even more richly in the long-term when the cycle turns.”
Cash Flows
Cash and cash equivalents were $32.4 million as of June 30, 2016, compared with $37.5 million on December 31, 2015.
For the six months ended June 30, 2016, the Company’s net cash provided by operating activities was $10.0 million, compared to $12.8 million for the six months ended June 30, 2015.
Conference Call Details
The Company’s management team will host a conference call to discuss the Company’s financial results tomorrow, August 16, 2016 at 8:00 a.m., Eastern Time (ET). Following a recorded discussion of the quarterly results, Edward Coll, Chairman and Chief Executive Officer, and Anthony Laura, Chief Financial Officer, will be available to answer questions from attending participants. 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# 53702106.
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 one week and can be accessed by calling (800) 585-8367 (domestic) or (404) 537-3406 (international) and referencing ID# 53702106.

Pangaea Logistics Solutions Ltd.
Condensed Consolidated Statements of Income
(unaudited)

| Three Months Ended June 30,
| 2016 |  | 2015
Revenues: |  |  |  |  |
Voyage revenue | $ | 53,548,976 |  |  | $ | 60,902,796 |
Charter revenue | 3,412,729 |  |  | 4,199,976 |
| 56,961,705 |  |  | 65,102,772 |
Expenses: |  |  |  |  |
Voyage expense | 26,766,724 |  |  | 28,129,297 |
Charter hire expense | 15,041,229 |  |  | 15,195,199 |
Vessel operating expense | 7,904,828 |  |  | 7,116,502 |
General and administrative | 2,935,950 |  |  | 3,916,119 |
Depreciation and amortization | 3,528,596 |  |  | 3,271,238 |
Loss on sale of vessels | — |  |  | 477,888 |
Total expenses | 56,177,327 |  |  | 58,106,243 |
Income from operations | 784,378 |  |  | 6,996,529 |
Other (expense) income: |  |  |  |  |
Interest expense, net | (1,530,425 | ) |  | (1,279,933 | )
Interest expense on related party debt | (75,010 | ) |  | (110,763 | )
Unrealized gain on derivative instruments | 1,387,391 |  |  | 363,096 |
Other income (expense) | 67,661 |  |  | 60,935 |
Total other expense, net | (150,383 | ) |  | (966,665 | )
Net income | 633,995 |  |  | 6,029,864 |
Income attributable to noncontrolling interests | (504,361 | ) |  | (569,227 | )
Net income attributable to Pangaea Logistics Solutions Ltd. | $ | 129,634 |  |  | $ | 5,460,637 |
Earnings per common share: |  |  |  |  |
Basic | $ | — |  |  | $ | 0.15 |
Diluted | $ | — |  |  | $ | 0.15 |
Weighted average shares used to compute earnings |  |  |  |  |
per common share |  |  |  |  |
Basic | 35,150,453 |  |  | 35,240,373 |
Diluted | 35,337,290 |  |  | 35,240,373 |

Pangaea Logistics Solutions Ltd.
Condensed Consolidated Balance Sheets

| June 30, 2016 |  | December 31, 2015
| (unaudited) |  |
Assets |  |  |
Current assets |  |  |  |  |
Cash and cash equivalents | $ | 32,423,408 |  |  | $ | 37,520,240 |
Restricted cash | 1,503,341 |  |  | 2,003,341 |
Accounts receivable (net of allowance of $4,761,813 at |  |  |  |  |
June 30, 2016 and $5,067,194 at December 31, 2015) | 14,480,516 |  |  | 19,617,943 |
Bunker inventory | 8,390,900 |  |  | 7,490,590 |
Advance hire, prepaid expenses and other current assets | 3,761,628 |  |  | 2,679,292 |
Total current assets | 60,559,793 |  |  | 69,311,406 |
Fixed assets, net | 282,077,776 |  |  | 255,145,807 |
Investments in newbuildings in-process | 8,848,000 |  |  | 42,505,783 |
Total assets | $ | 351,485,569 |  |  | $ | 366,962,996 |
Liabilities and stockholders' equity |  |  |  |  |
Current liabilities |  |  |
Accounts payable, accrued expenses and other current liabilities | $ | 18,405,761 |  |  | $ | 22,156,202 |
Related party debt | 10,976,423 |  |  | 13,321,419 |
Deferred revenue | 4,349,557 |  |  | 4,448,795 |
Current portion long-term debt | 20,091,616 |  |  | 19,499,262 |
Dividend payable | 12,624,825 |  |  | 12,724,825 |
Total current liabilities | 66,448,182 |  |  | 72,150,503 |
Secured long-term debt, net | 117,209,252 |  |  | 129,496,153 |
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; 36,525,053 shares issued and outstanding at June 30, 2016; 36,503,837 shares issued and outstanding and December 31, 2015 | 3,653 |  |  | 3,650 |
Additional paid-in capital | 133,349,031 |  |  | 133,075,409 |
Accumulated deficit | (23,539,795 | ) |  | (24,866,534 | )
Total Pangaea Logistics Solutions Ltd. equity | 109,812,889 |  |  | 108,212,525 |
Non-controlling interests | 58,015,246 |  |  | 57,103,815 |
Total stockholders' equity | 167,828,135 |  |  | 165,316,340 |
Total liabilities and stockholders' equity | $ | 351,485,569 |  |  | $ | 366,962,996 |

Pangaea Logistics Solutions Ltd.
Condensed Consolidated Statements of Cash Flows

| Six Months Ended June 30,
| 2016 |  | 2015
Operating activities |  |  |  |  |
Net income | $ | 2,238,169 |  |  | $ | 15,359,523 |
Adjustments to reconcile net income to net cash provided by operations: |  |  |  |  |
Depreciation and amortization expense | 7,044,052 |  |  | 6,261,832 |
Amortization of deferred financing costs | 354,431 |  |  | 404,968 |
Unrealized gain on derivative instruments | (1,051,432 | ) |  | (1,186,551 | )
Loss (gain) from equity method investee | 30,380 |  |  | (61,357 | )
Provision for doubtful accounts | 931,962 |  |  | 513,112 |
Loss on sales of vessels | — |  |  | 566,756 |
Write off unamortized financing costs of repaid debt | — |  |  | 25,557 |
Share-based compensation | 176,068 |  |  | 305,825 |
Change in operating assets and liabilities: |  |  |  |  |
Decrease in restricted cash | 500,000 |  |  | — |
Accounts receivable | 4,205,465 |  |  | 5,844,479 |
Bunker inventory | (900,310 | ) |  | 2,990,288 |
Advance hire, prepaid expenses and other current assets | (1,082,336 | ) |  | 1,821,996 |
Drydocking costs | (42,478 | ) |  | — |
Accounts payable, accrued expenses and other current liabilities | (2,319,659 | ) |  | (14,144,360 | )
Deferred revenue | (99,238 | ) |  | (5,891,286 | )
Net cash provided by operating activities | 9,985,074 |  |  | 12,810,782 |
Investing activities |  |  |  |  |
Purchase of vessels | (319,432 | ) |  | (44,770,740 | )
Proceeds from sales of vessels | — |  |  | 4,523,804 |
Deposits on newbuildings in-process | (83,000 | ) |  | (85,000 | )
Purchase of building and equipment | (30,000 | ) |  | (52,936 | )
Purchase of non-controlling interest | — |  |  | (250,000 | )
Net cash used in investing activities | (432,432 | ) |  | (40,634,872 | )
Financing activities |  |  |  |  |
Proceeds of related party debt | — |  |  | 2,506,667 |
Payments of related party debt | (2,500,496 | ) |  | (1,216,250 | )
Proceeds from long-term debt | 1,096,000 |  |  | 45,000,000 |
Payments of financing and issuance costs | (34,425 | ) |  | (729,866 | )
Payments of long-term debt | (13,110,553 | ) |  | (9,777,473 | )
Payments on line of credit | — |  |  | (3,000,000 | )
Common stock dividends paid | (100,000 | ) |  | (100,000 | )
Distribution to non-controlling interest | — |  |  | (521,920 | )
Net cash (used in) provided by financing activities | (14,649,474 | ) |  | 32,161,158 |
Net (decrease) increase in cash and cash equivalents | (5,096,832 | ) |  | 4,337,068 |
Cash and cash equivalents at beginning of period | 37,520,240 |  |  | 29,817,507 |
Cash and cash equivalents at end of period | $ | 32,423,408 |  |  | $ | 34,154,575 |
Disclosure of noncash items |  |  |  |  |
Cash paid for interest | $ | 2,381,513 |  |  | $ | 2,407,348 |

Pangaea Logistics Solutions Ltd.
Reconciliation of Adjusted EBITDA and Pro Forma Adjusted Earnings Per Share

|  | Three months ended June 30,
|  | 2016 |  | 2015
Adjusted EBITDA (in millions) |  |  |  |
Income from operations |  | 784,378 |  |  | 6,996,529 |
Depreciation and amortization |  | 3,528,596 |  |  | 3,271,238 |
Adjusted EBITDA |  | $ | 4,312,974 |  |  | $ | 10,267,767 |
Earnings Per Common Share |  |  |  |
Net income attributable to Pangaea Logistics Solutions Ltd. |  | $ | 129,634 |  |  | $ | 5,460,637 |
Weighted average number of common shares outstanding - basic |  | 35,150,453 |  |  | 35,240,373 |
Weighted average number of common shares outstanding - diluted |  | 35,337,290 |  |  | 35,240,373 |
Earnings per common share - basic |  | $ | 0.004 |  |  | $ | 0.155 |
Earnings per common share - diluted |  | $ | 0.004 |  |  | $ | 0.155 |
Pro Forma Adjusted EPS |  |  |  |
Net income attributable to Pangaea Logistics Solutions Ltd. |  | $ | 129,634 |  |  | $ | 5,460,637 |
Non-GAAP Adjustments: |  |  |  |
Add: loss on impairment of vessels |  | — |  |  | — |
Add: non-recurring charges |  | — |  |  | — |
Non-GAAP pro forma adjusted total earnings allocated to common stock |  | $ | 129,634 |  |  | $ | 5,460,637 |
Non-GAAP pro forma weighted average number of common shares |  | 35,150,453 |  |  | 35,240,373 |
Non-GAAP pro forma adjusted EPS |  | $ | 0.004 |  |  | $ | 0.15 |

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 condensed consolidated financial statements prepared and presented in accordance with GAAP, this earnings release discusses non-GAAP financial measures, including (1) non-GAAP adjusted EBITDA and (2) non-GAAP pro forma adjusted earnings per share (“EPS”). These are considered non-GAAP financial measures 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 these 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 these non-GAAP financial measures provide meaningful supplemental information regarding the performance of our core business by excluding non-cash losses on impairment of vessels and non-recurring charges that may not be indicative of our recurring core business operating results. These non-GAAP financial measures also facilitate management's internal planning and comparisons to our historical performance and liquidity. We believe these 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.
Non-GAAP adjusted net income attributable to Pangaea Logistics Solutions Ltd., Adjusted EBITDA, and pro forma adjusted EPS. Adjusted net income attributable to Pangaea Logistics Solutions Ltd. represents net income attributable to Pangaea Logistics Solutions Ltd. calculated in accordance with GAAP, plus non-cash losses on impairment of vessels and non-recurring charges. Adjusted EBITDA represents operating earnings before interest expense, income taxes, depreciation, amortization and loss on impairment of vessels. Earnings per share represents total earnings allocated to common stock divided by the weighted average number of common shares outstanding.
There are limitations related to the use of non-GAAP adjusted net income attributable to Pangaea Logistics Solutions Ltd., adjusted EBITDA, and pro forma adjusted EPS versus net income, income from operations, and EPS calculated in accordance with GAAP. In particular, Pangaea’s definition of adjusted net income attributable to Pangaea Logistics Solutions Ltd., adjusted EBITDA, and pro forma adjusted EPS used here is not comparable to net income, EBITDA, and EPS. Management provides specific information in order to reconcile the GAAP or non-GAAP measure to adjusted net income attributable to Pangaea Logistics Solutions Ltd., adjusted EBITDA, and pro forma adjusted EPS.
The table set forth above provides a reconciliation of the non-GAAP financial measures presented 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.
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.