Pangaea Logistics Solutions Ltd.

03/16/2026 | Press release | Distributed by Public on 03/16/2026 15:21

Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The following discussion should be read in conjunction with our consolidated financial statements and footnotes thereto contained in this report.
The MD&A generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 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, 2024 filed with the SEC on March 18, 2025.
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, Panamax and Post-Panamax segments. At any time, this fleet may be comprised of a total of 60-75 vessels that are owned or chartered-in on a short-term basis. For the twelve months ended December 31, 2025, the Company operated on average a total fleet of 64 vessels. At December 31, 2025, 39 vessels were wholly-owned or partially-owned through joint ventures.
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, 2025.
(In thousands of U.S. dollars)
Vessel Name Date Acquired Size Year Build Purchase Price Net Carrying
Amount
m/v Bulk Endurance January 2017 Ultramax 1C 2017 $ 28,000 $ 19,417
m/v Bulk Destiny January 2017 Ultramax 1C 2017 24,000 16,740
m/v Bulk Prudence June 2023 Ultramax 2014 26,650 25,478
m/v Bulk Courageous April 2021 Ultramax 2013 16,798 15,347
m/v Nordic Oasis January 2016 Panamax 1A 2016 32,600 23,851
m/v Nordic Olympic February 2015 Panamax 1A 2015 32,600 22,436
m/v Nordic Odin February 2015 Panamax 1A 2015 32,625 22,593
m/v Nordic Oshima September 2014 Panamax 1A 2014 33,709 21,599
m/v Nordic Orion April 2012 Panamax 1A 2011 32,363 16,652
m/v Nordic Odyssey April 2012 Panamax 1A 2010 32,691 16,768
m/v Bulk Valor June 2021 Supramax 2013 18,182 16,695
m/v Bulk Friendship September 2019 Supramax 2011 14,447 11,087
m/v Bulk Sachuest October 2022 Supramax 2010 17,364 15,401
m/v Bulk Brenton July 2024 Supramax 2016 28,762 27,079
m/v Bulk Patience August 2024 Supramax 2016 28,663 27,066
m/v Bulk Independence May 2019 Supramax 2008 14,393 11,756
m/v Bulk Pride December 2017 Supramax 2008 14,023 10,698
m/v Bulk Spirit February 2019 Supramax 2009 13,000 10,682
m/v Bulk Xaymaca August 2018 Panamax 2006 14,010 10,127
m/v Bulk Concord February 2022 Panamax 2009 19,900 16,739
m/v Bulk Promise July 2021 Panamax 2013 18,633 17,234
m/v Nordic Nuluujaak May 2021 Post Panamax 1A 2021 38,424 33,298
m/v Nordic Qinngua June 2021 Post Panamax 1A 2021 38,471 33,305
m/v Nordic Sanngijuq September 2021 Post Panamax 1A 2021 37,920 32,973
m/v Nordic Siku November 2021 Post Panamax 1A 2021 37,935 33,349
m/v Strategic Fortitude December 2024 Handysize 2016 16,874 17,406
m/v Strategic Resolve December 2024 Handysize 2015 14,606 14,929
m/v Strategic Explorer December 2024 Handysize 2015 14,606 14,646
m/v Strategic Entity December 2024 Handysize 2015 14,606 15,060
m/v Strategic Synergy December 2024 Handysize 2014 14,062 13,501
m/v Strategic Alliance December 2024 Handysize 2014 14,062 13,501
m/v Strategic Unity December 2024 Handysize 2014 14,062 13,502
m/v Strategic Harmony December 2024 Handysize 2014 14,062 13,501
m/v Strategic Equity December 2024 Handysize 2014 14,062 13,501
m/v Strategic Venture December 2024 Handysize 2014 14,062 13,502
m/v Strategic Savannah December 2024 Handysize 2013 11,431 10,984
m/v Strategic Spirit December 2024 Handysize 2012 11,068 11,401
m/v Strategic Vision December 2024 Handysize 2012 11,068 10,591
m/v Strategic Tenacity December 2024 Handysize 2012 10,705 10,247
Miss Nora G. Pearl November 2017 Deck Barge 1979 3,833 1,597
Total $ 839,333 $ 696,238
Recent Accounting Pronouncements
The Company considers the applicability and impact of all accounting standard updates ("ASU") issued by the Financial Accounting Standards Board (the "FASB"). ASUs not listed were assessed by the Company and either determined to be not applicable or expected to have minimal impact on its consolidated financial statements.
Recently Issued Accounting Standards Not Yet Adopted
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.
In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity. This update provides guidance on identifying the accounting acquirer when a variable interest entity ("VIE") that meets the definition of a business is acquired primarily through the exchange of equity interests. The amendments are intended to improve consistency in determining the accounting acquirer in transactions involving VIEs that qualify as businesses.
The standard becomes effective for annual periods beginning after December 15, 2026, and for interim periods within those fiscal years. Early adoption is permitted. The guidance is applied prospectively to applicable transactions occurring after the adoption date.
Because the amendments apply to specific transaction structures involving the acquisition of a VIE that meets the definition of a business, the Company expects the impact of this guidance to depend on the nature and structure of future acquisition transactions. The Company is currently evaluating the potential impact of ASU 2025-03 on its consolidated financial statements and related disclosures.
In May 2025, the FASB also issued ASU 2025-04, Compensation-Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Scope Application of Share-Based Payment Arrangements with Customers. This update clarifies the accounting for share-based payments made to customers, including guidance on performance conditions and forfeitures. The standard becomes effective for annual periods beginning after December 15, 2026, and for interim periods within those fiscal years, with early adoption permitted. The Company is currently assessing the impact of ASU 2025-04 on its consolidated financial statements.
In July 2025, the FASB issued ASU 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets (Topic 326). The amendments provide a practical expedient and an accounting policy election for estimating expected credit losses on current accounts receivable and contract assets arising under ASC 606. The standard is effective for annual periods beginning after December 15, 2025, including interim periods within those annual periods, with early adoption permitted. The amendments are to be applied prospectively. The Company is currently evaluating the adoption of this standard and does not expect the adoption of ASU 2025-05 to have a material impact on its consolidated financial statements or related disclosures.
Important Financial and Operational Terms and Concepts
The Company uses a variety of financial and operational terms and concepts when analyzing its performance.
These include revenue recognition, deferred revenue, allowance for credit losses, vessels and depreciation and long-lived assets impairment considerations, as defined above as well as the following:
Voyage Revenue.Voyage revenue is derived from voyage charters which involve the carriage of cargo from a load port to a discharge port, which is predetermined in each voyage contract. Gross revenue is calculated by multiplying the agreed rate per ton of cargo by the number of tons loaded. The Company directs how and for what purpose the vessel is used and therefore, these voyage contracts do not contain leases.
Charter Revenue.Charter revenue is earned when the Company lets a vessel it owns or operates to a charterer for a specified period of time. Charter revenue is based on the agreed rate per day. These time-charter arrangements contain leases because the lessee has the power to direct the use and receives substantially all of the economic benefits from the use of the vessel. The operating lease component and the vessel operating expense non-lease component of a time-charter contract are reported as a single component.
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.
Voyage Expenses.The Company incurs expenses for voyage charters, including bunkers (fuel), port charges, canal tolls, brokerage commissions and cargo handling operations, which are expensed as incurred.
Charter Expenses.The Company charters in vessels to supplement its owned fleet to support its voyage charter operations. The Company hires vessels under time charters with third party vessel owners, and recognizes the charter hire payments as an expense on a straight-line basis over the term of the charter. Charter hire payments are typically made in advance, and the unrecognized portion is reflected as advance hire in the accompanying consolidated balance sheets. Under the time charters, the vessel owner is responsible for the vessel operating costs such as crews, maintenance and repairs, insurance, and stores.
Vessel Operating Expenses.Vessel operating expenses represent the cost to operate the Company's owned vessels. Vessel operating expenses include crew hire and related costs, the cost of insurance, expenses relating to repairs and maintenance, the cost of spares and consumable stores, tonnage taxes, other miscellaneous expenses, and technical management fees. These expenses are recognized as incurred. Technical management services include day-to-day vessel operations, performing general vessel maintenance, ensuring regulatory and classification society compliance, arranging the hire of crew, and purchasing stores, supplies, and spare parts.
Terminal & Stevedore Expenses. Terminal & Stevedore expenses represent the cost to provide the Company's cargo handling services. Terminal & Stevedore expenses include direct labor and related costs, the cost of insurance, expenses relating to repairs and maintenance of shore based equipment, trucking, and other direct miscellaneous expenses.
Fleet Data.The Company believes that the measures for analyzing future trends in its results of operations consist of the following:
• Shipping days.The Company defines shipping days 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 a time charter (time charter days).
• Daily vessel operating expenses.The Company defines daily vessel operating expenses as vessel operating expenses divided by ownership days for the period. Vessel operating expenses include crew hire and related costs, the cost of insurance, expenses relating to repairs and maintenance, the costs of spares and consumable stores, tonnage taxes, other miscellaneous expenses, and technical management fees.
• Chartered in days.The Company defines chartered in days as the aggregate number of days in a period during which it chartered in vessels from third party vessel owners.
• Time Charter Equivalent ''TCE'' rates.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.
Selected Financial Data
The following tables present selected financial and operating data of the Company for the periods indicated. The selected consolidated financial data has been derived from the Company's audited consolidated financial statements.
December 31, 2025 December 31, 2024
Selected Data from the Consolidated Statements of Income
Voyage revenue $ 577,547 $ 494,107
Charter revenue 39,258 30,326
Terminal & stevedore revenue 15,236 12,103
Total revenue 632,041 536,536
Voyage expense 283,679 237,479
Charter hire expense 129,735 130,764
Vessel operating expenses 94,948 55,544
Terminal & stevedore expenses 12,189 9,299
Total cost of transportation and service revenue 520,551 433,085
Transportation and service depreciation and amortization 42,336 30,266
Gross Profit 69,154 73,185
Other operating expenses 31,210 24,736
Gain on sale of vessels (3,000) -
Income from operations 40,944 48,449
Total other expense, net (20,777) (16,679)
Net income 20,167 31,769
Income attributable to noncontrolling interests (798) (2,866)
Net income attributable to Pangaea Logistics Solutions Ltd. $ 19,369 $ 28,903
Net income per common share information
Basic income per share $ 0.30 $ 0.64
Diluted income per share $ 0.30 $ 0.63
Weighted-average common shares Outstanding - basic 63,802,958 45,391,855
Weighted-average common shares Outstanding - diluted 64,703,473 46,046,044
Cash dividends declared per share $ 0.25 $ 0.40
Selected Data from the Consolidated Balance Sheets
Cash, cash equivalents and restricted cash $ 103,324 $ 86,805
Total assets $ 928,096 $ 936,457
Total secured debt, financing obligations, and finance leases $ 372,208 $ 397,372
Total shareholders' equity $ 474,736 $ 474,664
Selected Data from the Consolidated Statements of Cash Flows
Net cash provided by operating activities $ 53,726 $ 65,691
Net cash provided by (used in) investing activities $ 11,411 $ (67,694)
Net cash used in by financing activities $ (48,619) $ (10,230)
Key Operating Metrics
2 2025 2024
Voyage days 20,322 15,669
Time charter days 3,007 1,738
Total shipping days (1)
23,329 17,407
TCE Rate ($/day) (2)
$ 14,279 $ 16,485
(1)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).
(2)Time Charter Equivalent ("TCE") rate is a non-GAAP measure commonly used in the shipping industry and represents voyage revenue less voyage expenses divided by the number of voyage days.
Non-GAAP Financial Measures
Management uses certain non-GAAP financial measures to evaluate the Company's operating performance. These measures should not be considered in isolation or as a substitute for financial measures prepared in accordance with U.S. GAAP.
The reconciliation of Gross profit to Adjusted Gross Profit and Net income to Adjusted EBITDA is as follows:
December 31, 2025 December 31, 2024
Gross Profit (GAAP) $ 69,154 $ 73,185
Add:
Transportation and service depreciation and amortization 42,336 30,266
Adjusted Gross Profit (Non-GAAP) (1)
$ 111,490 $ 103,451
Adjusted EBITDA (2)
Net Income $ 20,167 $ 31,769
Interest expense, net 22,375 17,154
Depreciation and amortization 42,475 30,376
Income tax provision (included in Other income) 533 285
Gain on sale of vessel (3,000) -
Share-based compensation 4,111 2,788
Unrealized loss on derivative instruments, net 1,355 953
Adjusted EBITDA (Non-GAAP) $ 88,015 $ 83,325
(1)Adjusted gross profit is defined as GAAP gross profit excluding transportation and service depreciation and amortization. Management believes this measure provides investors with additional insight into the operating performance of the Company's shipping operations by excluding non-cash depreciation expenses associated with the Company's vessels. Adjusted gross profit is not a measure recognized under U.S. GAAP and should not be considered as an alternative to gross profit, operating income or net income. The Company's definition of adjusted gross profit may not be comparable to similarly titled measures used by other companies.
(2)Adjusted EBITDA represents net income before interest expense, interest income, income taxes, depreciation and amortization, gain or loss on sale of vessels, share-based compensation, unrealized gains or losses on derivative instruments and other non-operating or non-recurring items, if any. Management uses Adjusted EBITDA as a supplemental performance measure and believes it provides investors with useful information to evaluate the Company's operating performance and its ability to generate cash flows from operations. Adjusted EBITDA is also reviewed periodically as a measure of financial performance by the Company's Board of Directors. Adjusted EBITDA is not a measure recognized under U.S. GAAP and should not be considered an alternative to net income, operating income or any other indicator of operating performance prepared in accordance with U.S. GAAP.
Industry Overview
We operate in a cyclical industry subject to macroeconomic shifts, geopolitical volatility and other factors. Our business is also subject to fluctuations in the supply and demand for vessels, together with global demand for drybulk commodities, which impact freight pricing.
The Baltic Dry Index ("BDI"), a broader market measure of the cost to transport drybulk commodities by sea, offers a market view into global supply demand trends and is considered the standard benchmark for drybulk cargo pricing. The BDI averaged 1,681 for 2025, down approximately 4%, compared to an average of 1,754 for 2024. The average published market rates for Panamax, Supramax, and Handysize vessels, reflecting the composition of the company's fleet, also decreased approximately 9%, to an average of $12,090 in 2025 from $13,314 in the same period of 2024.
In addition to broader market pressures, our operating results for 2025 also reflect the impact of fleet expansion. At December 30, 2024, the Company acquired 15 vessels to its owned fleet, representing a 58% increase in total vessel count. In July 2025, the Company sold one of these vessels. Overall, available owned shipping days increased by 5,398 days in the current year compared to the same period in 2024, which should be considered when comparing period-over-period performance metrics.
As a result of the industry's volatility, we have experienced fluctuations in our quarterly and annual operating results in the past, and we expect to continue experiencing such fluctuations in the future due to various factors, including cargo demand, vessel supply, competition, and seasonality.
TCE Performance
For the year ended December 31, 2025, the Company's TCE rate decreased by 13% to $14,279 from $16,485 in 2024, while dry bulk market rates for Panamax, Supramax, and Handysize vessels decreased by approximately9%. The Company's TCE rate outperformed the average of the Baltic Panamax, Supramax, and Handysize market indexes, exceeding average market rates by approximately 18%.This outperformance was driven by the Company's long-term contracts of affreightment (COAs), specialized fleet, and cargo-focused strategy.
Results of Operations
Fiscal Year Ended December 31, 2025 Compared to Fiscal Year Ended December 31, 2024
Revenues
Total revenue for the fiscal year ended December 31, 2025 was $632.0 million, compared to $536.5 million for the same period in 2024, representing an increase of $95.5 million, or 18%. The increase was primarily driven by an increase in total shipping days from 17,407 days in 2024 to 23,329 days in 2025, reflecting the expansion of the Company's fleet and increased vessel availability during the period. The increase in shipping days contributed approximately $182.4 million of additional revenue year over year. This increase was partially offset by lower market charter rates during the period, which reduced revenue by approximately $86.9 million, as evidenced by a 4% decline in the Baltic Dry Index (BDI) and a 9% decline in average rates for Panamax, Supramax and Handysize vessels.
Components of revenue are as follows:
Voyage Revenues: Voyage revenues increased by 17% to $577.5 million for the fiscal year ended December 31, 2025, compared to $494.1 million for the same period in 2024. The increase was primarily attributable to a 30% increase in voyage days, from 15,669 days in 2024 to 20,322 days in 2025, resulting from the acquisition of the SSI vessels at the end of 2024. This increase was partially offset by lower market rates as discussed above.
Charter Revenues: Charter revenues increased to $39.3 million from $30.3 million, or 29%, for the year ended December 31, 2025 compared to the same period in 2024. The increase was primarily driven by a significant rise in time charter days, which increased 73% to 3,007 days from 1,738 days in the prior-year period. The average time charter rate declined to $13,056 per day from $17,450 per day due to timing of entering into certain time charter arrangements in early 2025 at lower market rates, however the higher number of charter days more than offset the rate decrease, resulting in overall revenue growth. The optionality of our chartering strategy allows the Company to selectively release excess ship days, if any, into the market under time charter arrangements.
Terminal & Stevedore Revenues: Terminal & Stevedore revenues increased by 26% for the twelve months ended December 31, 2025 compared to the same period in 2024 due to the addition of 2 new port operations in the current year.
Operating and Business Expenses
The Components of our expenses are as follows:
Voyage Expenses: Voyage expenses for the fiscal year ended December 31, 2025, were $283.7 million, a 19% increase from $237.5 million for the year ended December 31, 2024. This increase was primarily driven by a 30% rise in voyage days to 20,322 days from 15,669 days in the prior year, reflecting the Company's expanded fleet. Correspondingly, total bunker, port, and canal costs increased in line with the higher level of operating activity.
Charter Hire Expenses: Charter hire expenses for the fiscal year ended December 31, 2025 were $129.7 million compared to $130.8 million for the same period in 2024, representing a slight decrease year over year. Chartered-in days increased to 9,046 days for the fiscal year ended December 31, 2025, compared to 8,523 days in the prior year. This increase in chartered-in activity was largely offset by lower market charter rates for chartered-in vessels during the period.
The average published market rates for Supramax, Panamax and Handysize vessels declined approximately 9%, from an average of $13,314 in 2024 to $12,090 in 2025. Consistent with the Company's charter-in strategy, the Company supplements its owned fleet with short-term chartered-in tonnage at prevailing market rates when necessary to meet cargo demand.
Per-day charter hire expenses were $14,342for the fiscal year ended December 31, 2025, compared to $15,342for the same period in 2024.
Vessel Operating Expenses: Vessel operating expenses for the year ended December 31, 2025, totaled $94.9 million compared to $55.5 million recorded for the same period in 2024. Ownership days increased to 14,757 days in 2025 compared to 9,107 days in 2024, reflecting the expansion of the Company's owned fleet following vessel acquisitions during the period. Vessel operating expenses per ownership day increased to $6,434 in 2025 from $6,099 in 2024. Technical management fees totaled $7.4 million in 2025 compared to $4.7 million in 2024, reflecting, in part, the transition of technical management for eight vessels from Bernhard Schulte Shipmanagement ("BSM") to Seamar, the Company's wholly owned subsidiary.
Terminal & Stevedore Expenses: Terminal and stevedore expenses increased to $12.2 million for the twelve months ended December 31, 2025, up from $9.3 million for the same period in 2024. This increase was primarily driven by the addition of 2 new port operations in the current year.
General and Administrative Expenses: For the fiscal year ended December 31, 2025, general and administrative expenses were $31.1 million, compared to $24.6 million for the same period in 2024. The increase was primarily attributable to (i) higher compensation-related costs, including a $1.3 million increase in stock-based compensation expense primarily due to a higher stock price and the acceleration of vesting schedules as the Company transitioned from five-year to four-year and subsequently three-year vesting periods over the past three years; and (ii) an approximately $5.1 million increase in payroll-related expenses, driven mainly by overall payroll increases and the acquisition of Strategic on December 30, 2024, which increased headcount and added a new office location in Connecticut.
Depreciation and Amortization: The Company depreciates its vessels on a straight-line basis over their estimated useful lives, which range 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 an estimated scrap rate per lightweight ton ("lwt"). Effective January 1, 2026, the Company revised certain depreciation estimates for its dry bulk vessels. The estimated useful life range was updated from 25-30 years to 25 years, and the estimated scrap rate was increased from $300 per lwt to $400 per lwt, supported by historical demolition prices over the past 15 years.
Depreciation and amortization expense increased by $12.1 million, or 40%, primarily due to an increase in ownership days, which rose to 14,757 days in 2025 from 9,107 days in 2024 as a result of vessel acquisitions.
Gain on sale of vessels: In the year ended December 31, 2025, the Company recorded a gain of $3.0 million related to the sale of two vessels. No gain on sale of vessels were recorded for the year ended December 31, 2024.
Unrealized (Loss) Gain on Derivative Instruments: 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.
The Company recorded an unrealized loss on derivative instruments of $1.4 million for the year ended December 31, 2025, compared to an unrealized loss of $1.0 million in the year ended December 31, 2024. 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, financing obligations and finance leases. The Company has used its capital primarily to fund operations, vessel acquisitions, and the repayment of debt and the associated interest expense. The Company may consider debt or additional equity financing alternatives from time to time. However, if market conditions deteriorate, the Company may be unable to raise additional debt or equity financing on acceptable terms or at all. As a result, the Company may be unable to pursue opportunities to expand its business.
At December 31, 2025 and 2024, the Company had working capital of $87.7 million and $82.9 million, respectively. The increase was primarily attributable to higher cash and cash equivalents, partially offset by increases in accounts payable and deferred revenue.
In assessing its ability to continue as a going concern, management considered the Company's history of generating positive operating cash flows ($53.7 million in 2025, and $65.7 million in 2024), its cash and restricted cash balances relative to current maturities of secured debt, financing obligations and finance leases, and its contract employment strategy through contracts of affreightment ("COAs"). Management believes that projected operating cash flows, together with cash on hand and available borrowings under existing credit facilities, will be sufficient to meet operating and capital requirements for at least the next twelve months. see Part II. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Results of Operations.
The table below summarizes our primary sources and uses of cash for the fiscal years ended December 31, 2025 and 2024.
2025 2024
Net cash provided by/(used in):
Operating activities 53,726 65,691
Investing activities 11,411 (67,694)
Financing activities (48,619) (10,230)
Net change $ 16,519 $ (12,232)
Operating Activities
Net cash provided by operating activities during the year ended December 31, 2025 was $53.7 million, compared to net cash provided by operating activities of $65.7 million during the year ended December 31, 2024. The decrease was primarily attributable to lower net income during the period, partially offset by higher non-cash expenses, including depreciation and amortization.
Non-cash adjustments included depreciation and amortization of $42.5 million in 2025 compared to $30.4 million in 2024, reflecting a full year of operations from vessels acquired in connection with the Strategic Shipping Inc. acquisition completed at the end of 2024. Drydocking costs also increased during the year as a result of higher drydock activity across the fleet.
Changes in operating assets and liabilities provided $6.2 million of cash in 2025 compared to $1.6 million in 2024. The increase was primarily driven by changes in inventory balances and deferred revenue during the period, partially offset by an increase in accounts receivable. Accounts receivable increased primarily due to higher voyage activity and an increase in voyages in process associated with the Company's higher shipping days. The increase was also impacted by the timing of customer billings and collections near period end.
Investing Activities
Net cash provided by investing activities was $11.4 million for the year ended December 31, 2025, compared to net cash used in investing activities of $67.7 million in 2024. The year-over-year improvement was primarily driven by $17.2 million of proceeds from vessel sales in 2025 and significantly lower capital expenditures, as no new vessels were acquired during the year compared to vessel acquisitions and other capital improvements in 2024.
Dividends received from equity method investments increased to $4.1 million in 2025 from $1.9 million in 2024. Cash used for the acquisition of a non-controlling interest totaled $2.7 million in 2025, related to the purchase of the remaining ownership interest in Seamar, which became a wholly owned subsidiary during the year.
Financing Activities
Net cash used in financing activities was $48.6 million for the year ended December 31, 2025, compared to $10.2 million in 2024. The increase in cash used was primarily driven by significantly lower debt proceeds in 2025, as vessel-related financings completed in 2024 were not repeated in the current year.
The Company continued to make scheduled repayments on long-term debt, financing obligations and finance leases, partially offset by refinancing proceeds received during 2025. In addition, the Company repurchased $3.0 million of ordinary shares and paid $16.3 million in common stock dividends during 2025, reflecting a lower quarterly dividend rate compared to 2024. Payments to non-controlling interests recorded as a long-term liability in 2024 did not recur in 2025 following the acquisition of the remaining ownership interest.
Capital Expenditures
Capital expenditures primarily relate to vessel acquisitions, ownership interests in vessels and capital improvements that enhance fleet efficiency, safety and regulatory compliance.
As of December 31, 2025, the Company's consolidated fleet consisted of 39 dry bulk vessels, including nine Panamax vessels (six Ice Class 1A), eight Supramax vessels, four Ultramax vessels (including two Ice Class 1C), four Post-Panamax Ice Class 1A vessels and fourteen Handysize vessels.
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 maintain and improve its vessels and to comply with international shipping standards and environmental laws and regulations. The Company has some flexibility regarding the timing of drydockings; however, the total cost of these expenditures is unpredictable.
In addition to potential vessel acquisitions, major capital expenditures include regularly scheduled drydockings necessary to maintain and improve vessels and comply with international shipping and environmental regulations. The Company expects to perform thirteen special surveys in 2026 at an aggregate cost of approximately $15.7 million and two intermediate surveys at an aggregate cost of approximately $3.0 million. Offhire related to these surveys is expected to range from ten to twenty days per vessel. These expenditures are expected to be funded from operating cash flows.
Critical Accounting Estimates
The preparation of our consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosures. Certain estimates involve a higher degree of judgment and complexity because they require management to make assumptions about matters that are inherently uncertain.
We consider an accounting estimate to be critical if the estimate requires significant judgment and if different assumptions could materially affect our financial condition or results of operations. Management evaluates its estimates on an ongoing basis using historical experience, current market conditions and other factors believed to be reasonable under the circumstances. Actual results may differ from these estimates.
Vessel Asset Impairment
Vessels represent the most significant component of the Company's total assets. The evaluation of vessel impairment requires significant judgment due to the cyclical and volatile nature of the dry bulk shipping industry and fluctuations in vessel market values and charter rates.
The Company reviews its vessels for impairment when events or changes in circumstances indicate that the carrying value of a vessel or vessel group may not be recoverable. Possible indicators of impairment may include events or changes in circumstances affecting the legal environment, the business climate, market value, extent or manner of use, and physical condition of the vessel asset. When such events or changes in circumstances exist, the Company evaluates its vessel assets for impairment by comparing undiscounted future cash flows expected to be generated over the life of each vessel asset to the respective carrying amount. If the Company's estimate of undiscounted future cash flows for any vessel asset for which indicators of impairment exist is lower than the vessel asset's carrying value, and the vessel's carrying value is greater than its fair value, the carrying value is written down, by recording a charge to operations, to the vessel asset's fair value as provided by third parties.
Estimating future cash flows requires management to make significant assumptions regarding future time charter equivalent ("TCE") rates, vessel utilization, operating costs, drydocking expenditures and residual values. Because these assumptions are influenced by global shipping demand, vessel supply and broader economic conditions, they are subject to significant uncertainty.
Future TCE rates represent the most significant assumption in the impairment analysis. For periods covered by existing charters or contracts, contracted rates are used. For periods beyond existing contracts, the Company estimates future TCE rates based on historical performance, current market conditions and industry outlook.
For the years ended December 31, 2025 and 2024, the Company concluded that no impairment indicators were identified and therefore no impairment testing or impairment charges were required.
Changes in assumptions, particularly future charter rates or vessel market values, could materially affect the Company's impairment analysis and could result in impairment charges in future periods.
Revenue Recognition - Voyages in Process
Revenue from voyage charters is recognized over time as the performance obligation is satisfied, generally from the commencement of loading through the completion of discharge. As of each reporting period, the Company estimates the proportion of voyages in process to determine the amount of revenue to recognize.
Estimating voyage progress requires management to make assumptions regarding the stage of completion of voyages at the reporting date. These estimates affect the amount of revenue recognized during the reporting period as well as related balances such as accounts receivable and deferred revenue.
Changes in estimates of voyage progress or voyage duration could affect the timing of revenue recognition between reporting periods.
Borrowing Activities
As of December 31, 2025 and 2024 the Company's borrowing activities primarily consisted of:
•Long-term secured debt, refer to "Note 9, Secured long-term debt" for detail information
•Financing obligations, refer to "Note 9, Secured long-term debt" for detail information
•Finance leases, refer to "Note 10, Finance leases" for detail information
Related Party Transactions
Refer to "Note 8, Related party transactions"
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements as of December 31, 2025 or 2024.
Pangaea Logistics Solutions Ltd. published this content on March 16, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on March 16, 2026 at 21:21 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]