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Item 7. Management’s Discussion and Analysis

2025-03-18 compared with 2024-03-14 · 305 added, 311 removed, 121 unchanged (84% of the section changed)

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The following discussion should be read in conjunction with our consolidated financial statements and footnotes thereto contained in this report.

Forward Looking Statements

All statements other than statements of historical fact included in this Form 10-K including, without limitation, statements under “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward looking statements.

When used in this Form 10-K, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or our management, identify forward looking statements.

Such forward looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management.

Actual results could differ materially from those contemplated by the forward looking statements as a result of the risk factors and other factors detailed in our filings with the Securities and Exchange Commission, including the risk factors set forth in Part I, Item 1A , above.

All subsequent written or oral forward looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph.

Critical Accounting Policies and Estimates

As discussed in Note 3, "Summary of Significant Accounting Policies," of our Financial Statements, which more fully describes our significant accounting policies, the preparation of consolidated financial statements in accordance with U.S.

GAAP requires us to exercise judgment in the process of applying our accounting policies.

It also requires that we make estimates and assumptions about future events that affect the amounts reported in the consolidated financial statements and accompanying notes.

The accounting policies and estimates that we believe are most critical to the portrayal of our financial condition and results of operations are listed below.

We believe these policies require the most difficult, subjective, and complex judgments in estimating the effect of inherent uncertainties.

Revenue Recognition:

Revenues are generated from time charters and voyage charters.

Time charter revenues are recognized on a straight-line basis over the term of the respective time charter agreements as service is provided.

Voyage revenues represent revenues earned by the Company, principally from providing transportation services under voyage charters.

A voyage charter involves the carriage of a specific amount and type of cargo on a load port to discharge port basis, subject to various cargo handling terms.

Under a voyage charter, the service revenues are earned and recognized ratably over the duration of the voyage.

A contract is accounted for when it has approval and commitment from both parties, the rights and payment terms are identified, the contract has commercial substance and collectability of consideration is probable.

Estimated losses under a voyage charter are provided for in full at the time such losses become probable.

Demurrage, which is included in voyage revenues, represents payments by the charterer to the vessel owner when loading and discharging time exceed the stipulated time in the voyage charter.

Demurrage is measured in accordance with the provisions of the respective charter agreements and the circumstances under which demurrage revenues arise.

Demurrage revenue is included in the calculation of voyage revenue and recognized ratably over the duration of the voyage to which it pertains.

Voyage revenue recognized is presented net of address commissions.

Charter revenues relate to a time charter arrangement under which the Company is paid to provide transportation services on a per day basis for a specified period of time.

Revenues from time charters are earned and recognized on a straight-line basis over the term of the charter, as the charters do not fall under the scope of ASC 606.

Revenue is not earned when vessels are offhire.

Terminal & Stevedore Revenue.

Terminal & Stevedore revenue is derived from inbound and outbound cargo handling services at ports which the Company operates in.

Gross revenue is earned typically based on a per-unit rate for volumes handled.

Long-lived Assets Impairment Considerations:

The carrying values of the Company’s vessels may not represent their fair market value or the amount that could be obtained by selling the vessel at any point in time because the market prices of second-hand vessels tend to fluctuate with changes in charter rates and the pricing of new vessels, which tend to be cyclical.

The carrying value of each group of vessels classified as held and used are reviewed for potential impairment when events or changes in circumstances indicate that the carrying value of a particular group may not be fully recoverable.

In such instances, an

impairment charge would be recognized if the estimate of the undiscounted future cash flows expected to result from the use of the group and its eventual disposition is less than its carrying value.

This assessment is made at the assets group level, which represents the lowest level for which identifiable cash flows are largely independent of other groups of assets.

The asset groups established by the Company are defined by vessel size and major characteristic or trade.

The significant factors and assumptions used in the undiscounted projected net operating cash flow analysis include the Company’s estimate of future time charter equivalent "TCE" rates based on current rates under existing charters and contracts.

When existing contracts expire, the Company uses an estimated TCE based on actual results and extends these rates out to the end of the vessel’s useful life.

TCE rates can be highly volatile, may affect the fair value of the Company’s vessels and may have a significant impact on the Company’s ability to recover the carrying amount of its fleet.

Accordingly, the volatility is contemplated in the undiscounted projected net operating cash flow by using a sensitivity analysis based on percent changes in the TCE rates.

The Company prepares a series of scenarios in an attempt to capture the range of possible trends and outcomes.

Projected net operating cash flows are net of brokerage and address commissions and assume no revenue on scheduled offhire days.

The Company uses the current vessel operating expense budget, estimated costs of drydocking and historical general and administrative expenses as the basis for its expected outflows, and applies an inflation factor it considers appropriate.

The net of these inflows and outflows, plus an estimated salvage value, constitutes the projected undiscounted future cash flows.

If these projected cash flows do not exceed the carrying value of the asset group, an impairment charge would be calculated.

Measurement of the impairment loss is based on the fair value of the asset as provided by third parties.

In both the first and fourth quarters of 2023, the Company identified triggering events associated with the sale of vessels, where the carrying value exceeded their fair value.

On January 18, 2023, the Company entered into a memorandum of agreement to sell the m/v Bulk Newport for $8.9 million in net consideration after brokerage commissions, resulting in a recorded loss on sale of $1.2 million in the first quarter of 2023.

Similarly, on October 17, 2023, the Company signed a memorandum of agreement to sell the m/v Bulk Trident for $9.5 million in net consideration after brokerage commissions, resulting in a loss on sale of $0.6 million in the fourth quarter of 2023.

The Company conducted an impairment analysis on each asset group and determined that the estimated undiscounted future cash flows exceeded their carrying amounts.

Therefore, no additional loss on impairment was recognized.

Also the Company concluded that no other triggering event had occurred during the remaining period of the 2023 which would require impairment testing.

During the first quarter of 2022, the Company determined that a triggering event occurred related to the sale of a vessel, as the carrying value exceeded its fair value.

On April 20, 2022, the Company signed a memorandum of agreement to sell the m/v Bulk Pangaea for a total net consideration of $8.6 million after brokerage commissions.

As a result, we recorded an impairment charge of $3.0 million in the first quarter of 2022.

The impairment analysis did not indicate any impairment on the remaining fleet.

Also the Company concluded that no triggering event had occurred during the remaining period of the 2022 which would require impairment testing.

The MD&A generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.

Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on March 14, 2024.

Pangaea Logistics Solutions Ltd.

and its subsidiaries (collectively, “Pangaea” or the “Company”) provides seaborne drybulk logistics and transportation services as well as terminal and stevedoring services.

Pangaea utilizes its logistics expertise to service a broad base of industrial customers who require the transportation of a wide variety of drybulk cargoes, including grains, coal, iron ore, pig iron, hot briquetted iron, bauxite, alumina, cement clinker, dolomite and limestone.

The Company provides ocean transportation services to clients utilizing an ocean-going fleet of motor vessels ("m/v") in the Handysize, Handymax, Supramax, Ultramax and Panamax and Post-Panamax segments.

At any time, this fleet may be comprised of a total of 45-60 vessels that are owned or chartered-in on a short-term basis.

For the twelve months ended December 31, 2024, the Company operated on average a total fleet of 48 vessels.

At December 31, 2024, 41 vessels were wholly-owned or partially-owned through joint ventures, following the acquisition of 15 Handysize vessels on December 30, 2024.

The table set forth below indicates the purchase price of the Company’s vessels and the net carrying amount of each vessel as of December 31, 2024.

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Vessel Name Date Acquired Size Year Build Purchase Price Net Carrying

m/v Bulk Endurance January 2017 UMX - 1C 2017 $ 28,000 $ 21,859

m/v Bulk Destiny January 2017 UMX - 1C 2017 24,000 18,770

m/v Bulk Prudence June 2023 UMX 2014 26,650 26,534

m/v Bulk Courageous April 2021 UMX 2013 16,798 15,145

m/v Nordic Oasis January 2016 PMX-1A 2016 32,600 24,854

m/v Nordic Olympic February 2015 PMX-1A 2015 32,600 23,306

m/v Nordic Odin February 2015 PMX-1A 2015 32,625 23,412

m/v Nordic Oshima September 2014 PMX-1A 2014 33,709 22,938

m/v Nordic Orion April 2012 PMX-1A 2011 32,363 19,790

m/v Nordic Odyssey April 2012 PMX-1A 2010 32,691 18,950

m/v Bulk Valor June 2021 SMX 2013 18,182 16,434

m/v Bulk Friendship September 2019 SMX 2011 14,447 12,811

m/v Bulk Sachuest October 2022 SMX 2010 17,364 16,487

m/v Bulk Independence May 2019 SMX 2008 14,393 13,753

m/v Bulk Pride December 2017 SMX 2008 14,023 11,194

m/v Bulk Freedom June 2017 SMX 2005 9,016 8,150

m/v Bulk Spirit February 2019 SMX 2009 13,000 12,970

m/v Bulk Xaymaca August 2018 PMX 2006 14,010 11,624

m/v Bulk Concord February 2022 PMX 2009 19,900 18,966

m/v Bulk Promise July 2021 PMX 2013 18,633 16,970

m/v Bulk Endurance January 2017 Ultramax 1C 2017 $ 28,000 $ 20,616

m/v Bulk Destiny January 2017 Ultramax 1C 2017 24,000 17,729

m/v Bulk Prudence June 2023 Ultramax 2014 26,650 26,744

m/v Bulk Courageous April 2021 Ultramax 2013 16,798 16,028

m/v Nordic Oasis January 2016 Panamax 1A 2016 32,600 23,436

m/v Nordic Olympic February 2015 Panamax 1A 2015 32,600 22,089

m/v Nordic Odin February 2015 Panamax 1A 2015 32,625 21,980

m/v Nordic Oshima September 2014 Panamax 1A 2014 33,709 23,106

m/v Nordic Orion April 2012 Panamax 1A 2011 32,363 18,144

m/v Nordic Odyssey April 2012 Panamax 1A 2010 32,691 17,181

m/v Bulk Valor June 2021 Supramax 2013 18,182 15,726

m/v Bulk Friendship September 2019 Supramax 2011 14,447 11,957

m/v Bulk Sachuest October 2022 Supramax 2010 17,364 15,678

m/v Bulk Brenton July 2024 Supramax 2016 28,762 28,256

m/v Bulk Patience August 2024 Supramax 2016 28,663 28,240

m/v Bulk Independence May 2019 Supramax 2008 14,393 12,622

m/v Bulk Pride December 2017 Supramax 2008 14,023 10,678

m/v Bulk Freedom June 2017 Supramax 2005 9,016 7,326

m/v Bulk Spirit February 2019 Supramax 2009 13,000 11,961

m/v Bulk Xaymaca August 2018 Panamax 2006 14,010 11,042

m/v Bulk Concord February 2022 Panamax 2009 19,900 18,511

m/v Bulk Promise July 2021 Panamax 2013 18,633 16,344

m/v Nordic Nuluujaak May 2021 Post Panamax 1A 2021 38,424 34,667

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m/v Nordic Siku November 2021 Post Panamax 1A 2021 37,935 34,672

m/v Strategic Fortitude December 2024 Handysize 2016 16,874 16,874

m/v Strategic Resolve December 2024 Handysize 2015 14,606 14,606

m/v Strategic Explorer December 2024 Handysize 2015 14,606 14,606

m/v Strategic Entity December 2024 Handysize 2015 14,606 14,606

m/v Strategic Synergy December 2024 Handysize 2014 14,062 14,062

m/v Strategic Alliance December 2024 Handysize 2014 14,062 14,062

m/v Strategic Unity December 2024 Handysize 2014 14,062 14,062

m/v Strategic Harmony December 2024 Handysize 2014 14,062 14,062

m/v Strategic Equity December 2024 Handysize 2014 14,062 14,062

m/v Strategic Venture December 2024 Handysize 2014 14,062 14,062

m/v Strategic Savannah December 2024 Handysize 2013 11,431 11,431

m/v Strategic Spirit December 2024 Handysize 2012 11,068 11,068

m/v Strategic Vision December 2024 Handysize 2012 11,068 11,068

m/v Strategic Tenacity December 2024 Handysize 2012 10,705 10,705

m/v Strategic Endeavor December 2024 Handysize 2010 7,711 7,711

Pearl November 2017 Deck Barge 1979 3,833 1,597

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Recent Accounting Pronouncements

On of January 1, 2023, we adopted ASU No.

On January 1, 2023, we adopted ASU No.

2016-13, "Financial Instruments—Credit Losses" ("ASU 2016-13").

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The adoption of the accounting standard did not have any material impact on our consolidated financial statements.

In March 2020, the FASB issued ASU No.

2020-04, “Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” which provides optional expedients and exceptions for applying generally accepted accounting principles (“GAAP”) to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

In January 2021, the FASB issued ASU No.

2021-01, “Reference Rate Reform (Topic 848):

Scope,” which clarified that certain optional expedients and exceptions in Topic 848 apply to derivatives that are affected by the discounting transition due to reference rate reform.

In December 2022, the FASB issued ASU No.

2022-06, "Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848," which defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief under Topic 848.

The Company is currently evaluating the impact that adopting this new accounting standard will have on its consolidated financial statements and related disclosures.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which amends the existing segment reporting guidance (ASC Topic 280 — Segment Reporting (“ASC 280”)) to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount for other segment items by reportable segment and a description of its composition, the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

In addition, companies with a single reporting segment will have to provide all of the disclosures required by ASC 280, including the significant segment expense disclosures.

The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The Company is currently evaluating the impact of our pending adoption of this standard on its financial statement disclosures.

The Company adopted ASU No.

2020-04, ASU No.

2021-01, and ASU No.

2022-06 related to Reference Rate Reform (Topic 848).

The adoption did not have a material impact on the Company’s consolidated financial statements or related disclosures."

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

This update expands the disclosure requirements for reportable segments by enhancing disclosures related to significant segment expenses, interim segment profit or loss, and segment assets.

It also clarifies how the Chief Operating Decision Maker ("CODM") uses the reported segment profit or loss information to assess segment performance and allocate resources.

The Company adopted ASU 2023-07 effective December 15, 2024, and determined that the application of this guidance did not have a material impact on its consolidated financial statements.

For additional details on the adoption effects of ASU 2023-07, refer to Note 16.

Recently Issued Accounting Standards Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which requires disclosure of incremental income tax information related to the income tax rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements.

The update is effective for annual periods beginning after December 15, 2024 on a prospective basis, and retrospective application is permitted.

The Company is currently evaluating the impact of ASU 2023-09 on its disclosures within its consolidated financial statements.

In November 2024, the FASB released ASU 2024-03, which focuses on Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.

This update requires the disclosure of additional information regarding specific expense categories in the financial statement notes.

It becomes effective for annual periods starting after December 15, 2026, and for interim periods starting after December 15, 2027, with early adoption permitted.

The update can be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all prior periods presented in the financial statements.

The Company is currently assessing the impact of ASU 2024-03 on its disclosures in the consolidated financial statements.

Important Financial and Operational Terms and Concepts

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The Company defines TCE rates as total revenues less voyage expenses divided by the length of the voyage, which is consistent with industry standards.

TCE rate is a common shipping industry performance measure used primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on

voyage charters, because rates for vessels on voyage charters are generally not expressed in per-day amounts while rates for vessels on time charters generally are expressed in per-day amounts.

Business Overview

TCE rate is a common shipping industry performance measure used primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because rates for vessels on voyage charters are generally not expressed in per-day amounts while rates for vessels on time charters generally are expressed in per-day amounts.

Selected Financial Data

(in thousands, except shipping days data) December 31, 2024 December 31, 2023

Selected Data from the Consolidated Statements of Income

Voyage revenue $ 494,107 $ 468,581

Charter revenue 30,326 23,716

Terminal & stevedore revenue 12,103 6,971

Total revenue 536,536 499,268

Voyage expense 237,479 227,435

Charter hire expense 130,764 111,034

Vessel operating expenses 55,544 55,784

Terminal Expenses 9,299 5,809

Total cost of transportation and service revenue 433,085 400,061

Transportation and service depreciation and amortization 30,266 29,960

Gross Profit 73,185 69,247

Other operating expenses 24,736 22,891

Loss on sale of vessels — 1,739

Income from operations 48,449 44,617

Total other expense, net (16,679) (16,079)

Net income 31,769 28,538

Income attributable to noncontrolling interests (2,866) (2,214)

Net income attributable to Pangaea Logistics Solutions Ltd.

$ 28,903 $ 26,322

Net income from continuing operations per common share information

Basic income per share $ 0.64 $ 0.59

Diluted income per share $ 0.63 $ 0.58

Weighted-average common shares Outstanding - basic 45,392 44,774

Weighted-average common shares Outstanding - diluted 46,046 45,475

Cash dividends declared per share $ 0.40 $ 0.40

Adjusted EBITDA (1)

83,040 79,724

Shipping Days (2)

Voyage days 15,669 14,922

Time charter days 1,738 1,789

Total shipping days 17,407 16,711

TCE Rates ($/day)

$ 16,485 $ 15,849

Selected Data from the Consolidated Balance Sheets

Cash and cash equivalents $ 86,805 $ 99,038

Total assets $ 936,457 $ 705,180

Total secured debt, financing obligations, and finance leases $ 397,372 $ 264,435

Total shareholders' equity $ 474,664 $ 370,196

Selected Data from the Consolidated Statements of Cash Flows

Net cash provided by operating activities $ 65,691 $ 53,787

Net cash used in investing activities $ (67,694) $ (15,982)

Net cash used in by financing activities $ (10,230) $ (67,152)

Amounts in the table above have been calculated based on unrounded numbers.

Accordingly, certain amounts may not appear to recalculate due to the effect of rounding.

(1) Adjusted EBITDA represents operating earnings before interest expense, interest income, income taxes, depreciation and amortization, loss on sale of vessels, share-based compensation and other non-operating income and/or expense, and other non-recurring items, if any.

Adjusted EBITDA is included because it is used by management and certain investors to measure operating performance and is also reviewed periodically as a measure of financial performance by Pangaea's Board of Directors.

Adjusted EBITDA is not an item recognized by the generally accepted accounting principles in the United States of America, or U.S.

GAAP, and should not be considered as an alternative to net income, operating income, or any other indicator of a company's operating performance required by U.S.

Pangaea’s definition of Adjusted EBITDA used here may not be comparable to the definition of EBITDA used by other companies.

(2) Shipping days are defined as the aggregate number of days in a period during which its owned or chartered-in vessels are performing either a voyage charter (voyage days) or time charter (time charter days).

The reconciliation of gross profit to net transportation and service revenue and income from operations to Adjusted EBITDA is as follows:

(in thousands) Years Ended December 31,

Net Transportation and Service Revenue (3)

Gross Profit (4)

$ 73,185 $ 69,247

Transportation and service depreciation and amortization 30,266 29,960

Net transportation and service revenue $ 103,451 $ 99,207

Adjusted EBITDA

Net Income $ 31,769 $ 28,538

Interest expense, net 17,154 13,916

Depreciation and amortization 30,376 30,070

EBITDA $ 79,299 $ 72,524

Loss on sale of vessel — 1,739

Share-based compensation 2,788 2,088

Unrealized loss on derivative instruments, net 953 2,925

Other non-recurring items — 448

Adjusted EBITDA $ 83,040 $ 79,724

Amounts in the table above have been calculated based on unrounded numbers.

Accordingly, certain amounts may not appear to recalculate due to the effect of rounding.

(3) Net transportation and service revenue represents total revenue less the total direct costs of transportation and services, which includes charter hire, voyage and vessel operating expenses, and terminal & stevedore expenses.

Net transportation and service revenue is included because it is used by management and certain investors to measure performance by comparison to other logistic service providers.

Net transportation and service revenue is not an item recognized by the generally accepted accounting principles in the United States of America, or U.S.

GAAP, and should not be considered as an alternative to net income, operating income, or any other indicator of a company's operating performance required by U.S.

Pangaea’s definition of net transportation and service revenue used here may not be comparable to an operating measure used by other companies.

(4) Gross profit represents total revenue less total cost of transportation and service revenue and less transportation related depreciation and amortization.

Industry Overview

The dry bulk sector of the transportation and logistics industry is cyclical and can be volatile due to changes in supply of vessels and demand for transportation of dry bulk commodities.

After reaching levels not seen in over a decade in 2021, the dry bulk freight market remained strong in historical terms in the first half of 2022 before slowing down in the second half of the year due to decreased freight demand.

This slowdown continued through the first quarter of 2023, with signs of improvement throughout the remainder of 2023.

The Baltic Dry Index (“BDI”), a measure of dry bulk market performance, averaged 1,426 for 2023, compared to an average of 1,832 for 2022, down approximately 22%.

More specifically, and reflecting the composition of the Company's fleet, the average published market rates for Supramax and Panamax vessels decreased approximately 43% from an average of $20,012 in 2022 to $11,391 in 2023.

The Baltic Dry Index (“BDI”), a measure of dry bulk market performance, averaged 1,754 for 2024, compared to an average of 1,426 for 2023, up approximately 23%.

More specifically, and reflecting the composition of the Company's fleet, the average published market rates for Supramax and Panamax vessels rose approximately 17% from an average of $11,391 in 2023 to $13,314 in 2024.

We have historically experienced fluctuations in our results of operations on a quarterly and annual basis due to the volatility of the dry bulk sector.

We expect to experience continued fluctuations in our operating results in the foreseeable future due to a variety of factors, including cargo demand for vessels, supply of vessels, competition, and seasonality.

Effect of Inflation

High inflation in the United States and in many of the global economies where the Company operates has impacted vessel operating costs, including crew travel, transportation of equipment and spares, and drydocking costs.

We expect crew payroll expenses to continue to increase over the near and medium future, and other inflated cost changes may make our vessel daily operating costs higher.

Increases in the cost of fuel consumed on voyages are usually absorbed by cargo market rates passed on to customers or covered by fuel cost pass through under the terms of long-term contracts.

Because interest rates on a large portion of the Company’s long-term debt, and finance leases is fixed or capped, the impact of higher interest rates on the Company’s earnings is limited.

TCE Performance

For the year ended December 31, 2023, the Company's TCE rates were down 35% to $15,849 from $24,434 for the year ended December 31, 2022, while the overall dry bulk market rates declined by approximately 43% for the year ended December 31, 2023.

The Company's achieved TCE rate for the year ended December 31, 2023 outperformed the average of the Baltic Panamax and Supramax market indexes and exceeded the average market rates by approximately 39% due to its long-term contracts of affreightment, ("COAs"), its specialized fleet and its cargo-focused strategy.

For the year ended December 31, 2024 , the Company's TCE rate increased by 4% to $16,485 from $15,849 in 2023 , while dry bulk market rates for Panamax and Supramax vessels rose by approximately 17% .

The Company's TCE rate outperformed the average of the Baltic Panamax and Supramax market indexes, exceeding average market rates by approximately 24%.

This outperformance was driven by the Company's long-term contracts of affreightment (COAs), specialized fleet, and cargo-focused strategy.

2024 Highlights

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Pangaea’s revenues are derived predominantly from voyage charters and time charters.

Total revenue for the fiscal year ended December 31, 2023, was $499.3 million compared to $699.7 million, for the same period in 2022, a 29% decrease.

The number of shipping days decreased 6% to 16,711 in the fiscal year ended December 31, 2023, from 17,715 for the same period in 2022.

The revenue decrease was primarily due to a 35% decrease in the average TCE rate, which was $15,849 per day for the twelve months ended December 31, 2023, compared to $24,434 per day for the same period in 2022.

Total revenue for the fiscal year ended December 31, 2024, was $536.5 million compared to $499.3 million, for the same period in 2023, a 7% increase.

The number of shipping days increased 4% to 17,407 in the fiscal year ended December 31, 2024, from 16,711 for the same period in 2023.

The revenue increase was primarily due to a 4% increase in the average TCE rate, which was $16,485 per day for the twelve months ended December 31, 2024, compared to $15,849 per day for the same period in 2023.

Components of revenue are as follows:

Voyage revenues decreased by 27% for the fiscal year ended December 31, 2023 to $468.6 million from $640.0 million for the same period in 2022.

The decrease in voyage revenues was primarily due to lower average TCE rates earned throughout 2023 due to declined market rates.

The number of voyage days decreased 2% to 14,922 for the twelve months ended December 31, 2023 from 15,237 for the same period in 2022.

Charter revenues decreased to $23.7 million from $59.7 million, or 60%, for the year ended December 31, 2023 compared to the same period in 2022.

The decrease in charter revenues was due to a decrease in time charter days as well as a decrease in charter hire rates evidenced by the decrease in index rates for Panamax and Supramax vessels of approximately 43% compared to the same period of 2022.

Voyage revenues increased by 5% for the fiscal year ended December 31, 2024 to $494.1 million from $468.6 million for the same period in 2023.

The increase was primarily driven by higher average TCE rates in 2024 due to stronger market conditions.

The number of voyage days increased 5% to 15,669 for the twelve months ended December 31, 2024 from 14,922 for the same period in 2023.

Charter revenues increased to $30.3 million from $23.7 million, or 28%, for the year ended December 31, 2024 compared to the same period in 2023.

The increase in charter revenues was due to an increase in charter hire rates evidenced by the increase in index rates for Panamax and Supramax vessels of approximately 17% compared to the same period of 2023 and partially offset by a decrease in time charter days.

The time charter days were down 3% to 1,738 in the twelve months ended December 31, 2024 from 1,789 in the twelve months ended December 31, 2023.

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The optionality of our chartering strategy, in which the Company charters vessels in on short term periods with market available days during the charter period, allows the Company to selectively release excess ship days, if any, into the market under time charter arrangements.

Terminal & Stevedore revenues increased to $7.0 million, for the twelve months ended December 31, 2023, as a result of the company's acquisition of port and terminal operations in June 2023.

Terminal & Stevedore revenues increased by 74% to $12.1 million from $7.0 million for the twelve months ended December 31, 2024 compared to the same period in 2023.

This revenue increase is mainly due to the acquisition of port operations in June 2023, which contributed to a full year of operations in the current year.

Voyage Expenses

Voyage expenses for the fiscal year ended December 31, 2023 were $227.4 million compared to $262.1 million for the year ended 2022, a decrease of approximately 13%.

The decrease is primarily due to a decrease in bunker consumption expense of $40.7 million driven by a decrease in bunker fuel prices, partially offset by an increase in port charges and canal tolls of $2.3 million.

Total costs of bunkers consumed decreased by 25% for the twelve months ended December 31, 2023 compared to the same period in 2022.

The port charges and canal tolls increased primarily due to an increase in the market cost of canal tolls over the period.

Voyage expenses for the fiscal year ended December 31, 2024, were $237.5 million, a 4% increase from $227.4 million for the year ended December 31, 2023.

This increase was primarily driven by a 5% rise in voyage days.

Charter Hire Expenses

The Company charters in vessels, typically on short term basis, from other shipowners to supplement its owned fleet.

Charter hire expenses paid to third party shipowners were $111.0 million for the year ended December 31, 2023, compared to $222.3 million for the year ended December 31, 2022, a 50% decrease.

The decrease in charter hire expenses was primarily due to a decrease in market rates to charter-in vessels and a decrease in the number of chartered-in days from 8,971 days in the twelve months ended December 31, 2022 to 7,933 days for the twelve months ended December 31, 2023.

Charter hire expenses on a per day basis were $13,996 for the twelve months ended December 31, 2023 and $24,783 for the same period in 2022.

The average published market rates for Supramax and Panamax vessels decreased approximately 43% from an average of $20,012 in 2022 to $11,391 in the same period of 2023 .

The Company charters in vessels, typically on a short-term basis, from other shipowners to supplement its owned fleet.

Charter hire expenses paid to third-party shipowners were $130.8 million for the year ended December 31, 2024 , compared to $111.0 million for the year ended December 31, 2023 , an 18% increase .

The increase in charter hire expenses was primarily due to an increase in market rates to charter-in vessels and a rise in the number of chartered-in days from 7,933 in 2023 to 8,523 in 2024 .

Per-day charter hire expenses were $15,342 for the twelve months ended December 31, 2024 , compared to $13,996 for the same period in 2023 .

The average published market rates for Supramax and Panamax vessels increased approximately 17% from an average of $11,391 in 2023 to $13,314 in 2024 .

The Company's flexible charter-in strategy allows it to supplement its owned fleet with short-term chartered-in tonnage at prevailing market prices when needed to meet cargo demand.

Vessel Operating Expenses

Vessel operating expenses for the year ended December 31, 2023 were $55.8 million, compared to $56.9 million for the same period in 2022, a decrease of approximately 2%.

Vessel operating expenses for the year ended December 31, 2024 , totaled $55.5 million , slightly lower than the $55.8 million recorded for the same period in 2023 .

Ownership days for the twelve months ended December 31, 2024 , and 2023 were 8,741 and 8,230 , respectively.

Excluding technical management fees, vessel operating expenses on a per day basis were $5,703 for the twelve months ended December 31, 2023 and $5,804 for the same period in 2022.

Technical management fees were approximately $4.5 million and $4.8 million for the twelve months ended December 31, 2023 and 2022, respectively.

The decrease in vessel operating expenses was also attributable a decrease in crew expenses due to a decrease in crewing costs, crew changes and expenses related to COVID-19 and the war in Ukraine in the prior year.

The Company continues to face general inflationary pressures particularly impacting the cost of lubes, stores and spares.

Excluding technical management fees, vessel operating expenses per day were $5,820 in 2024 , down from $6,256 in 2023 .

Technical management fees amounted to $4.7 million in 2024 , compared to $4.3 million in 2023 .

Terminal & Stevedore Expenses

Terminal & Stevedore expenses increased to $5.8 million for the twelve months ended December 31, 2023, as a result of the company's acquisition of port and terminal operations in June 2023.

Terminal and stevedore expenses increased to $9.3 million for the twelve months ended December 31, 2024, up from $5.8 million for the same period in 2023.

This increase was primarily driven by the acquisition of port operations in June 2023, resulting in a full year of operational contributions in 2024.

General and Administrative Expenses

General and administrative expenses increased from $20.1 million for the year ended December 31, 2022 to $22.8 million for the year ended December 31, 2023.

The increase was primarily due to an increase in costs associated with the acquisition of port and terminal operations in June of 2023.

The increase in general and administrative expenses from $22.8 million to $24.6 million for the year ending December 31, 2024, was primarily driven by higher compensation related expenses.

Depreciation and Amortization

We depreciate the cost of our vessels on a straight-line basis over the expected useful life of each vessel.

Depreciation is based on the cost of the vessel less its estimated residual value.

We estimate the useful life of our vessels ranging between 25 years to 30 year from the date of initial delivery from the shipyard to the original owner.

We estimate the scrap rate to be $300/lwt to compute each vessel's residual value.

Depreciation and amortization expense increased $0.6 million or 2%.

The increase was primarily due to the increase in ownership days to 8,988 days in 2023 from 8,962 days in 2022.

The increase in ownership days is due to the acquisition of vessels, offset by vessel sales in the current year, which was part of a fleet renewal plan.

The increase in depreciation and amortization expense was due to an increase in drydocking amortization.

Three drydockings were completed in 2023 and four drydockings were completed in 2022.

We depreciate our vessels on a straight-line basis over their expected useful life, which ranges from 25 to 30 years from the date of initial delivery from the shipyard to the original owner.

Depreciation is calculated based on the vessel's cost, less its estimated residual value.

The residual value is determined using a scrap rate of $300 per lightweight ton (lwt).

Depreciation and amortization expense increased by $0.3 million, or 1%, primarily due to an increase in ownership days, which rose to 8,741 days in 2024 from 8,230 days in 2023 as a result of vessel acquisitions.

Additionally, the increase in depreciation and amortization expense was driven by higher drydocking amortization, with four drydockings completed in 2024 compared to three in 2023.

Loss on sale of vessels

The Company recorded a loss of $1.7 million on the sale of the m/v Bulk Trident and m/v Bulk Newport in the year ended December 31, 2023.

The Company recorded a loss of $0.3 million on the sale of the m/v Bulk Pangaea in the year ended December 31, 2022.

Impairment of vessels

During the twelve months ended December 31, 2022, the Company recorded $3.0 million of impairment of vessel assets.

On April 20, 2022 the Company entered into an agreement to sell the Bulk Pangaea for $8.8 million, the sale was finalized and the vessel delivered to its new owner on June 23, 2022.

No loss on impairment of vessels were recorded in the year ended December 31, 2023.

In the year ended December 31, 2023, the Company recorded a $1.7 million loss on the sale of the M/V Bulk Trident and M/V Bulk Newport.

No vessel sale gains or losses were recorded in 2024.

Unrealized (Loss) Gain on Derivative Instruments

The Company assesses risk associated with fluctuating future freight rates and bunker prices, when appropriate, actively hedges identified economic risk that may impact the operating income of long-term cargo contracts with forward freight agreements or bunker swaps.

The usage of such derivatives can lead to fluctuations in the Company’s reported results from operations on a period-to-period basis.

The Company recorded an unrealized loss on derivative instruments of $2.9 million in the year ended December 31, 2023 and an unrealized gain on derivative instruments of $0.7 million in the year ended December 31, 2022, respectively.

Refer to Note 7 Margin Account, Derivative and Fair Value Measures to the consolidated financial statements for further information.

The Company evaluates risks related to fluctuating future freight rates and bunker prices and, when appropriate, actively hedges identified economic risks that may impact the operating income of long-term cargo contracts through forward freight agreements or bunker swaps.

The use of these derivatives may result in period-to-period fluctuations in the Company's reported operating results.

In the year ended December 31, 2024, the Company recorded an unrealized loss on derivative instruments of $1.0 million, compared to an unrealized loss of $2.9 million in the year ended December 31, 2023.

For further details, refer to Note 7, Margin Account, Derivatives, and Fair Value Measures , in the consolidated financial statements.

Liquidity and Capital Resources

Liquidity and Cash Needs

The Company has historically financed its capital requirements with cash flow from operations, the issuance of common stock, proceeds from non-controlling interests, and proceeds from long-term debt and finance lease financing arrangements.

The Company has used its capital primarily to fund operations, vessel acquisitions, and the repayment of debt and the associated interest expense.

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At December 31, 2024 and 2023, the Company had working capital of $82.9 million and $86.5 million, respectively.

The decrease in working capital was primarily driven by (i) $34.5 million of cash acquisitions, including the m/v Bulk Prudence and the port and terminal operation in June of 2023, (ii) $20.4 million reclassifications of long-term debt to current portion of long-term debt, and (iii) partially offset by proceeds from the sale of vessels and operating income generated during the twelve months ended December 31, 2023.

The decrease in working capital was primarily driven by the increase in bunker inventory, partially offset by a rise in accounts payable.

Considerations made by management in assessing the Company’s ability to continue as a going concern are its ability to consistently generate positive cash flows from operations, which were approximately $65.7 million in 2024, and $53.8 million in 2024;

its excess of cash and cash restricted by facility agents over the current portion of secured long-term debt and finance lease obligations, and its focus on contract employment (COAs).

its excess of cash and cash restricted by facility agents over the current portion of secured long-term debt, financing obligations and finance leases, and its focus on contract employment (COAs).

In addition, the Company has demonstrated its ability to adapt to changing market conditions by changing the chartered-in profile to meet its cargo commitments and react to volatile market rates.

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Net cash provided by operating activities during the year ended December 31, 2024 was $65.7 million, compared to net cash provided by operating activities of $53.8 million during the year ended December 31, 2023.

The cash flows from operating activities decreased compared to the same period in the prior year primarily due to the decrease in income from operations, and timing of customer receipts and supplier payments.

The cash flows from operating activities increased compared to the same period in the prior year primarily due to the increase in income from operations, and timing of customer receipts and supplier payments.

Investing Activities

Net cash used in investing activities during the twelve months ended December 31, 2023 was $16.0 million compared to net cash used in investing activities was $28.5 million for the same period in 2022.

During the year ended December 31, 2023, the Company (i) paid $27.3 million for the purchase of one vessel and other vessel improvements and (ii) paid $7.2 million net, for cash acquisition of a port and terminal operation.

This use of cash was partially offset by the proceeds from the sale of two vessels for $17.3 million.

Net cash used in investing activities of $28.5 million in 2022 primarily consists of $35.7 million for vessel acquisitions partially offset by the proceeds from the sale of one vessel for $8.4 million.

Net cash used in investing activities for the twelve months ended December 31, 2024, was $67.7 million, compared to $16.0 million for the same period in 2023.

In 2024, the Company spent $69.3 million on purchasing two vessels and vessel improvements and $0.0 million as a partial cash allocation for the SSI asset acquisition.

These outflows were partially offset by $1.9 million in dividends received from equity method investments.

In 2023, net cash used in investing activities totaled $16.0 million, primarily due to $27.3 million spent on vessel acquisitions and $7.2 million on port and terminal operations acquisitions, partially offset by the proceeds from the sale of two vessels for $17.3 million.

Financing Activities

Net cash used in financing activities in 2024 was $10.2 million compared to net cash used in financing activities of $67.2 million for the same period of 2023.

During the twelve months ended December 31, 2023, the Company repaid $15.8 million of long term debt, and $20.2 million of finance leases.

The Company also paid $18.1 million of common stock cash dividends and $10.4 million cash dividends to non-controlling interests.

Net cash used in financing activities was $34.1 million for 2022.

During the twelve months ended December 31, 2022, the Company received $8.5 million in proceeds from long-term debt, $15.0 million in proceeds from finance leases.

The Company repaid $15.4 million of long term debt, $15.8 million of finance leases and $5.0 million of other long term liabilities.

The Company also paid $13.4 million of common stock cash dividends and $5.0 million cash dividends to non-controlling interests.

During the twelve months ended December 31, 2024, the Company repaid $33.1 million of long term debt, $19.2 million of financing obligations and $3.0 million finance leases.

Additionally, the Company distributed $18.7 million in cash dividends to common stockholders and made payments totaling $21.0 million, including $19.0 million for the acquisition of the remaining 50% equity ownership of Nordic Bulk Partners LLC from HS Nordic LLC and $2.0 million for payments to non-controlling interests recorded as a long-term liability.

The Company also paid $2.3 million in cash dividends to non-controlling interests, offset by new borrowing of 89million.

Net cash used in financing activities for 2023 totaled $67.2 million.

Over the twelve months ended December 31, 2023, the Company repaid $15.8 million in long-term debt, $11.3 million in financing obligations, and $8.9 million in finance leases.

Additionally, the Company distributed $18.1 million in cash dividends to common stockholders and $10.4 million in cash dividends to non-controlling interests.

The Company also made a $2.5 million payment to non-controlling interests, recorded as a long-term liability.

Capital Expenditures

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nine Panamax drybulk carriers (six of which are Ice-Class 1A);

seven Supramax drybulk carriers, two Ultramax Ice-Class IC, two Ultramax and four Post Panamax Ice Class 1A drybulk vessels.

nine Supramax drybulk carriers, two Ultramax Ice-Class IC, two Ultramax, four Post Panamax Ice Class 1A drybulk vessels, and 15 Handysize vessels acquired through the Strategic Shipping Inc.

In addition to vessel acquisitions that the Company may undertake in future periods, its other major capital expenditures include funding its program of regularly scheduled drydockings necessary to make improvements to its vessels, as well as to comply with international shipping standards and environmental laws and regulations.

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The Company has some flexibility regarding the timing of drydocking, but the total cost is unpredictable.

The Company expects to perform two special surveys in 2024 at an aggregate total cost of approximately $2.0 million.

The Company expects to perform nine special surveys in 2025 at an aggregate total cost of approximately $13.0 million.

The Company expects to perform four intermediate surveys in 2025 at an aggregate total cost of approximately $1.5 million.

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The Company anticipates that this process of recertification will require it to reposition these vessels from a discharge port to shipyard facilities, which will reduce the Company’s available days and operating days during that period.

Borrowing Activities

Long-term debt consists of the following:

December 31, 2023 December 31, 2022 Interest Rate (%) (1)

Maturity Date

Bulk Nordic Odyssey (MI) Corp., Bulk Nordic Orion (MI) Corp.

Senior Secured Term Loan Facility (2) (3)

12,512,080 14,395,409 2.95 % December 2027

Bulk Nordic Oshima (MI) Corp., Bulk Nordic Odin (MI) Corp., Bulk Nordic Olympic (MI) Corp., Bulk Nordic Oasis (MI) Corp.

Secured Term Loan Facility (2) (3) (4)

39,800,000 44,600,000 3.38 % June 2027

The Amended Senior Facility - Dated May 13, 2019 (formerly The Amended Senior Facility - Dated December 21, 2017) (4)

– Bulk Nordic Six Ltd.

- Tranche A (2)

9,033,325 10,099,993 4.39 % May 2024

– Bulk Nordic Six Ltd.

— 2,070,000 — % Paid in full in January 10, 2023

– Bulk Pride - Tranche C (2)

1,900,000 3,000,000 5.39 % May 2024

– Bulk Independence - Tranche E (2)

9,500,000 10,500,000 3.54 % May 2024

Bulk Valor Corp.

Loan and Security Agreement (2)

10,087,642 11,424,507 3.29 % June 2028

Bulk Promise Corp.

9,685,334 11,069,630 5.45 % October 2027

Bulk Sachuest (2)

$ 7,733,094 $ 8,500,000 6.19 % October 2029

109 Long Wharf Commercial Term Loan — 374,466 — % Paid in full in January 24, 2023

Critical Accounting Policies and Estimates

As discussed in Note 3, "Summary of Significant Accounting Policies," of our Financial Statements, which describes our significant accounting policies, the preparation of consolidated financial statements in accordance with U.S.