Rhode Island-based Pangaea Logistics Solutions is being hailed as “a model of consistency" after turning in a near-breakeven fourth quarter that exceeded some analyst expectations.
Noble Capital Markets analyst Poe Fratt also called Pangaea “unique and different” in maintaining a buy rating on the Ed Coll-led owner of dry bulk vessels.
Pangaea lost $600,000, or a penny per share, for the quarter before a one-time adjustment that gave it earnings of $0.09 per share. Revenue of $101.8m was down from $102.2m in the fourth quarter of 2017.
However, Fratt said earnings before interest, taxes, depreciation and amortisation (Ebitda) of $12.2m was ahead of his expectations of $10.2m on wider-than-expected outperformance on rates and higher charter-in days.
While down from $16.6m in the third quarter, Ebitda was nearly 20% above the $10.7m seen in 2017’s final quarter.
Time charter equivalent (TCE) rates of $14,360 improved both from the previous quarter’s $13,835 and the $12,505 seen in the year-ago quarter.
Pangaea focuses on project cargoes in niche trades such as exporting iron ore from Canada’s Baffin Island aboard ice-class bulkers.
Fratt said the model allows Pangaea to outperform market indices with a cargo focus that insulates the owner against rates cycles.
“We believe that the unique business model is under appreciated and the risk/reward profile is attractive," Fratt told clients.
“While the stock is up 8% [year to date], Pangaea remains attractive as a way to participate in the expected recovery in dry bulk market fundamentals. [Pangaea’s] unique asset-light logistics approach offers exposure to the dry bulk market, but also dampens market risk.”
Pangaea also turned in a strong year. Net income of $17.8m ($0.42 per share) topped $7.8m ($0.20) in 2017.
Income from operations was up 125% to $36.1m from $16m. Pangaea’s TCE rates rose 20% year over year. Pangaea says it beat published market rates by an average of 25% over the two-year period.
“In almost every measure we had a great year,” said Coll, noting that the company finished 2018 with a cash balance of $56m.
