Pangaea Logistics Solutions Ltd.

Good morning. My name is Chelsea and I will be your conference operator today. At this time, I would like to welcome everyone to the Pangea Logistics Solutions fourth quarter and full year 2025 results conference call. Today's call is being recorded and will be available for replay beginning at 11 o'clock a.m. Eastern Standard Time. The recording can be accessed by dialing 800-839-5632 domestic or 402-220-2559 internationally. All lines are currently muted, and after the prepared remarks, there will be a live question and answer session. If you would like to ask a question during the Q&A segment, please press star 1 on your telephone. If your question has been answered, you may remove yourself from the queue at any time by pressing star 2. We do ask that you please pick up your handset for optimal sound quality. It is now my pleasure to turn the floor over to Stephan Neely with Balaam Advisors. Please go ahead.

Thank you, operator, and welcome to the Pangea Logistics Solutions fourth quarter and full year 2025 results conference call. Leading the call with me today is CEO Mads Pedersen and Chief Financial Officer Gianni Del Signore. Today's discussion contains forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the SEC. Except as required by law, we undertake no obligation to update our forward-looking statements. At the conclusion of our prepared remarks, we will open the line for questions. With that, I'd like to turn the call over to Matt.

Thank you, Stephen, and welcome to those joining us on the call today. I'm excited to speak to you all on my first earnings call as CEO of Pangea. On behalf of everyone at Pangea, I want to extend our appreciation and gratitude to Mark Lanowski for his many years of leadership and for helping to facilitate a smooth transition. During my 16 years with the company, I've been fortunate to be a part of our evolution into a best-in-class operator with a unique and valuable business model. I am incredibly proud of the team that we have assembled and grateful for the opportunity to lead Pangea into our next phase of multi-year growth and shareholder value creation. Turning to the fourth quarter of 2025, we delivered solid results supported by a strong completion to the 2025 Arctic ice season and stable overall drive-off demand. Our fourth quarter TCE rate averaged 19% above the prevailing market for Panamax, SupraMax, and HandySize indices, reflecting the value provided by our Nice Ice Class capabilities and long-term COAs. Total shipping days increased 26% year-over-year, largely reflecting the integration of the HandySize vessels we acquired from SSI at the end of 2024. This expansion drove significant operating leverage. Adjusted EBITDA grew 22% year-over-year to $28.7 million, highlighting the advantages of our integrated logistics model and increased scale. During the quarter, we also continued investing in long-term strategic differentiation through our integrated logistics platform, which combines specialized shipping with terminal, stevedoring, and port services. We commenced operation in Lake Charles, Louisiana, and remain on track to launch expanded operations at the Port of Tampa early in the second half of this year. These investments deepen our customer relationships, enhance recurring revenue opportunities, and further integrate Pangea into our customer supply chains, creating additional value for our customers. We also continue to advance our fleet renewal strategy. During the quarter, we sold the 2005 build for Freedom for $9.6 million. Additionally, we recently entered into an agreement to sell the Bolshev Maka for $9.6 million. These actions reflect our ongoing commitment to maintaining a modern, efficient fleet aligned with customer needs and evolving regulatory requirements. We remain disciplined in allocating capital. Our priorities of fleet renewal, organic growth, balance sheet strength, and shareholder returns remains unchanged going into 2026. Throughout 2025, we repurchased approximately 600,000 shares for roughly $3 million and paid approximately $16.3 million in dividends. We entered the year with approximately $103 million in unrestricted cash supported by strong operating cash flow. Our balance sheet strength gives us the financial flexibility to continue executing on these priorities while navigating the current dry bulk environment. Near-term dry bulk fundamentals remain constructive for our mix of minor bulks. The resumption of normal trade relations from the U.S. to China has supported activity in the U.S. Gulf, which is an important region for us and the dry park market as a whole. Limited effective surprise growth, systemic regulatory constraints, support of favorable medium-term outlook. The recent development in the Arabian Gulf does not directly impact Nigeria, as we have no ships in the area, and it has historically not been a large part of our trade patterns. The industry as a whole is feeling the indirect impacts through increased volatility in fuel prices and the disruption of rival trade flows. AGEA is uniquely positioned in the Arctic, a region where we have unparalleled operating experience and the largest and most modern high ice cloud fleet in our market segment. We see renewed geopolitical and commercial focus on the region, and over the long term, we expect this attention to be a positive tailwind. As we progress through the first quarter of 2026, market sentiment remains positive and pricing continues to hold at favorable levels. To date, we have booked 5,920 shipping dates at a TCE of 14,917 per day, reflecting healthy demand and an encouraging start to the year. Benjia enters 2026 with strong operating momentum, a disciplined and proven strategy, and a well-capitalized balance sheet that provides flexibility across cycles. I am confident in our ability to continue generating consistent value for our customers and shareholders. With that, I'll now turn the call over to Johnny to walk through our fourth quarter financial results.

Thank you, Mads, and welcome to those joining us on the call today. Our fourth quarter financial results were highlighted by sustained TCE premiums relative to the prevailing market, supported by our niche ice class fleet during the peak of the Arctic trade season. Fourth quarter TCE rates were $17,773 per day, a premium of 19% over the average published market rates for Panamax, Supermax, and handy-sized vessels in the period. Our adjusted EBITDA for the fourth quarter was approximately $29 million, an increase of about $5 million. driven by a 25% increase in shipping days and an 11% increase in TCE earned year-over-year. Adjusted EBITDA margin was 17% in the fourth quarter of 2025 as compared to 13% in the prior year. Our total charter hire expenses increased by 36% compared to the fourth quarter of 2024, primarily due to a year-over-year increase in market rates to chartering vessels as total charter-in days remained relatively flat. Our charter-in cost on a per-day basis was approximately $19,100 in the fourth quarter of 2025, an increase of 39% year-over-year, which reflects a similar increase in the average market for Panamax, Supermax, and the handy-sized vessels. Through today, we've booked 2,543 days at 14,000 $390 per day for the first quarter of 2026. Vessel operating expenses increased by 94% year over year, primarily due to the acquisition of the SSI fleet, which increased total owned days by 56%, as well as incremental costs incurred related to the transfer of eight of our ice class vessels to CMAR management during the fourth quarter. On a per day basis, for full year 2025, vessel operating expenses net of technical management fees was $5,932 per day. Total general and administrative expenses increased by 7% from 6.3 million to approximately 6.7 million. The increase was primarily due to an increase in stock-based compensation expense due to the acceleration of vesting schedules during the fourth quarter of 2025. In total, our reported GAAP net income for the fourth quarter was $11.9 million, or 19 cents per diluted share. When excluding the impact of the gain on sale, unrealized losses from derivative instruments, as well as other non-GAAP adjustments, our reported adjusted net income attributable to Tangier during the quarter was $10.1 million, or 16 cents per diluted share. Moving on to the cash flows, Total cash from operations was approximately $15 million, driven by strong operating performance. At quarter end, we had approximately $103 million in unrestricted cash. In total debt, including finance lease obligations, approximately $372 million. During quarter, our overall interest expense net of interest income was $5.4 million, an increase of $1.2 million. due to new debt facilities entered into during the third quarter, as well as the assumed debt and finance leases associated with the SSI acquisition. As Matt noted, throughout 2025, we purchased just over 600,000 shares for approximately $3 million and paid $16.3 million in quarterly dividends. Further, in February, we declared a $0.05 per share dividend to shareholders as of February 27th and payable on March 13th, 2026. Our buyback program complements our quarterly dividend policy, reinforcing our focus on delivering shareholder returns through a disciplined and balanced approach to capital allocation. Going forward, we will maintain the same disciplined approach to capital. Our priorities remain clear. Preserve financial flexibility, deliver consistent returns to shareholders, and invest selectively in opportunities that strengthen our integrated shipping and logistics platform. This includes advancing our terminal and speed drawing operations and continuing our fleet renewal strategy with a focus on capital efficient initiatives that enhance our ability to meet customer cargo needs and regulatory compliance over the long term. With that, we will now open the line for questions.

Thank you. If you would like to ask a question, press star 1 on your keypad. To leave the queue at any time, press star 2. Once again, that is star one to ask a question. And we'll pause for just a moment to allow everyone a chance to join the queue. And our first question will come from Laura Mayer with VRADI Securities. Please go ahead.

Hi, good morning. Thank you for taking the question. My first question, have you been able to leverage your handy-sized vessels to grow your onshore port intramural business?

Good morning, Laura. Thank you for the question. Yeah, we are experiencing nice synergies both between the anti-size fleet and especially our existing Supermax fleet. And we are also in our port and terminals, we have also handled cargoes on several of our anti-size vessels. So there's a nice balance between the two activities, yes.

Thank you. And with the current Geopolitics, disruption in the tanker markets has received a lot of investor attention. Has the dry bulk sector and Pangea been affected by recent events in the Middle East?

I think our direct exposure to the conflict in the area is virtually non-existent. We have no ships in the area. We have no ships going there. We have no people... working in the region. We had two of our seafarers that were transiting through an airport, but they were able to make it out and make it home safely. So the direct impact on us is non-existent. The indirect impact, I think, is mainly being felt through oil price volatility and the potential for even further trade disruption as as the materials on the dry side that are moving in and out of the U.S. Gulf need to find alternative routes. So it's still very early in that process to see how that will all shake out. It's still very much uncertain, but on balance, it could have an impact for sure.

Great. Thanks. I'll pass it on.

Thank you.

Thank you. And as a reminder, that is star one to enter the queue. And we'll take our next question from Poflat with AGP. Please go ahead. Your line is open.

Hi, good morning, Mads. Good morning, Gianni. Just a couple of quick ones, a little more detailed, please. Can you talk about the impact, the potential impact of fuel prices, bunker fuel, and how you manage your, you know, forward-looking bunker fuel prices?

Sure. Thanks. Good morning, Pof. So we manage our approach to fuel prices primarily in two different ways. The biggest component of that is that several of our larger contracts, especially the longer-term ones, have longer adjustment clauses in them. So the freight is changed depending on the prevalent fuel price at any point in time. So around the time we're performing the shipment, calculation made that shows the impact of a change in fuel price and the freight is adjusted accordingly. So our earnings on that contract, on those contracts, doesn't change really. It's sort of floating the fuel price. And then for our shorter exposure, we use – we hedge through using diversives. That is not something that is new to us. We've done that for many years. We have to when we are operating a business like ours. We have quite a big short-term book that has a fixed rate to it. So that is possible. It's relatively cheap. It's pretty efficient. And I believe on-balance is probably a strength for us that we can manage that exposure honestly.

My sense is you protected or you're hedged or, you know, insulated from any bunker fuel price increases for, say, the next six months to nine months. Is that fair? And so that, you know, you're really exposed as we look into the latter part of 2026 and maybe into 2027 if oil prices, you know, continue to remain where they are right now and bunker fuel prices, you know, stay where they are?

No, I actually wouldn't say that, because the further out you go in our contract base, that's where we have the Bunga installation mechanism in the contract. So we are protected on our COA portfolio, either through a Bunga installation clause or through a hedge position. Whatever future business we will be doing will be priced at whatever is the Bunga prices at that time.

Okay, so you'll be able to dynamically adjust. You know, in those two buckets that you talked about, Matt, what's the first bucket as far as the overall business? You know, whether you measure it on, you know, tons moved or revenue or, you know, some kind of metric.

You mean you refer to like the freight?

Yeah, the freight to COA business. You know, I'm just trying to appreciate sort of how those two, you know, fuel price adjustments, you know, which is more, which has, which is more meaningful, I guess.

I would, I think if I understand your question correctly, Paul, is that you're asking how much of the contract with bunker adjustment costs and how many are hedged with derivatives? Is that your question?

Yeah, that'd be helpful. Just any way you sort of want to portray it.

Yeah, I would argue that probably in the shorter term, it's probably done through the river, which is probably close to, I don't know, maybe 75%. And if you go out further out, it's done 100% through longer escalation clauses.

Okay. And then if you could just expand on your comment that, you know, trade flows may be impacted by what's going on in the Middle East and You know, you talked about, you know, trade going out of the U.S. Gulf. Can you just expand on that comment a little bit more?

So I think one thing that we all have to bear in mind that this is still very fresh, and I don't think you can see any changes. So a lot of this is sort of, you know, expectations all coming close to speculation. But there is a expected to be a pretty significant impact from reduction in gas exports out of the AG that potentially could be substituted with coal. And obviously coal is being moved on bulk vessels, dry bulk vessels, and where that coal will be sourced from is still a little, I think, very much an unknown and up in the air, but potentially could be long-haul business that will positively affect some mild demand for the dry bulk market.

Okay, so specifically coal out of the U.S. to backfill, you know, any shortfall in MNG out of the Middle East?

Potentially, that could happen, yes. But, again, it's still very early days in terms of that, in terms of the complex and what the impact will be. But it is something that could happen, yes.

And then you detailed a lot of activity on the, you know, the terminal, the port terminals, stevedoring. Can you just maybe quantify the potential impact of 2026 numbers as far as the expansion, you know, the activity there? Are we going to see a, you know, step up in revenues and margin? Or is it going to be, you know, if we could just quantify that impact, that'd be helpful.

Yeah, well, I can take that. It's a... For Q4, a lot of these just started to come online, but it's really the impact will be for 2026. So we have Aransas with Lake Charles, Tampa, and Pascagoula all coming on. So we do expect to step up incremental EBITDA next year, and it's probably around $3 million for 2026 is what we're expecting. In total, just as things start to fall in place throughout 2026, We expect to see that incremental EBITDA for the full year.

Okay. That was an EBITDA member, Keone? Yeah, yeah, correct. And then can you just talk about the, you know, the fleet renewal? You sold two assets, one per quarter for the last two quarters. What's on the front as far as the fleet renewal? Can you talk about both on the buy side and the sell side?

Sure. The decisions around those two transactions were driven primarily by the age of the vessel. They were both approaching special surveys. One was 22, one was 20 years old. That is historically when we have decided to dispose of assets, so that's not really anything new. We're constantly in the market looking at potential candidates to bring into the fleet. And we are pretty optimistic about both the near-term market outlook and longer-term as well. So we expect, of course, to be more active on that side of the fleet, adding a little bit of capacity as we go. Great.

Thanks a lot.

Thanks, Bob.

Thanks, Bob.

Thank you. And at this time, there are no further questions in the queue. so I'd like to turn the meeting back over to Mads for any additional or closing remarks.

Thank you very much. Once again, thank you for joining our call. Should you have any questions, please feel free to contact us at investors at pangeals.com, and a member of our team will follow up with you. This concludes our call today. You may now disconnect.

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