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On August 11, Pangaea Logistics Solutions (NASDAQ:PANL) reported second-quarter results that showed just how much a freight market can swing in a shipper's favor.
Time charter equivalent rates jumped 50% year over year, and adjusted EBITDA grew by nearly $20 million to $35 million.
For a dry bulk operator whose fortunes rise and fall with global trade flows, that kind of swing is the whole story, and the question now is whether the strength carries into the back half of the year.
Pangaea's second-quarter TCE rates came in at $18,153 per day, a 10% premium over the average published market rate of $16,502 per day across the Panamax, Supramax, and Handysize indices.
Management attributed the gap to fleet positioning, a greater concentration of vessels in the Pacific during a period of strong Asian demand, and longstanding customer relationships that enabled the company to navigate a volatile market.
Through the earnings call date, Pangaea had already booked 4,873 shipping days at a TCE of $20,258 per day for the third quarter.
That included a seasonal boost, since the company's ice-class fleet is busiest during the Arctic summer trading season, which peaks in the third quarter and tapers through the fourth.
The company is also building a second growth engine onshore.
Terminal and stevedore revenue grew 11% year over year to about $4 million after Pangaea started operations at the Port of Tampa during the quarter, joining existing terminals at Aransas and Lake Charles that came online within the past year.
Management expects roughly $3 million of incremental EBITDA annually from these operations.
Pangaea also raised its quarterly dividend to $0.10 per share and ended the quarter with $105 million in unrestricted cash, boosted by $9.7 million in proceeds from the sale of the Bulk Xaymaca during the quarter, following the sale of the Bulk Freedom for $9.6 million late last year.
That rate strength came with rising costs attached.
| Product | Price | Change |
|---|---|---|
| Brent Crude | $102.14/bbl | +0.34% |
| WTI Crude | $96.90/bbl | +0.21% |
| EN590 Diesel | $846/MT | +0.18% |
| Jet Fuel A-1 | $1090/MT | +0.55% |
| Mazut M100 | $450/MT | -0.15% |
| Bitumen 60/70 | $470/MT | +0.08% |
| Sulphur Gran 99.5% | $470/MT | -0.44% |
| Urea 46% Gran | $650/MT | +1.12% |
| NPK 16-16-16 | $460/MT | -0.28% |
| Nat Gas TTF | $15.42/MMBtu | +0.92% |
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