Pangaea Logistics Solutions Ltd. Aktie

Good morning. My name is Erica, and I will be your conference operator today. At this time, I would like to welcome everyone to the Pangaea Logistics Solutions Second Quarter 2026 Results Conference Call.

Today's call is being recorded and will be available for replay beginning at 11:00 a.m. Eastern. The recording can be accessed by dialing (800) 925-9941 for domestic or (402) 220-5395 for international. [Operator Instructions]

It is now my pleasure to turn the floor over to Stefan Neely with Vallum Advisors. Please go ahead.

Thank you, operator, and welcome to the Pangaea Logistics Solutions Second Quarter 2026 Results Conference Call. Leading the call with me today are CEO, Mads Petersen; and Chief Financial Officer, Gianni Del Signore.

Today's discussion contains forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the SEC.

Except as required by law, we undertake no obligation to update our forward-looking statements. At the conclusion of our prepared remarks, we will open the line for questions.

With that, I would like to turn the call over to Mads.

Thank you, Stefan, and welcome to those joining us on the call today. We generated strong results in both revenue and profitability during the second quarter. Our financial performance was driven by strong execution across both our owned and chartered-in fleet as well as balanced positioning of our assets to take advantage of stronger overall demand, especially in Asia.

Robust markets contributed to a 50% increase in our TCE rates for the second quarter notably, our TCE rates averaged 10% above the prevailing market for the Panamax, Supramax and Handysize indices. This premium reflects the benefits of our fleet positioning strategy, the value of our operating platform, long-standing customer relationships and ability to manage a volatile market effectively.

We generated significant operating leverage from the favorable market environment with second year quarter adjusted EBITDA growing by nearly $20 million year-over-year to $35 million. Just as important, these results highlight the value of the business model, which allows us to protect and, in many cases, expand our margins in dynamic market environments. We actively managed volatile fuel markets through hedging and contract terms, while our continued focus on fleet positioning and backhaul trades allowed us to capture arbitrage opportunities.

Our balanced approach to fleet deployment, including a greater concentration of vessels in the Pacific region contributed positively and our increased exposure to shorter-term time charters enabled us to benefit from positive developments in our core Atlantic markets.

Strong execution across our chartered-in business underscores our ability to translate favorable conditions into positive margins. We continue to grow our onshore logistics platform in the second quarter, commencing operations at the Port of Tampa. Tampa joins our operations at and Lake Charles, all under multiyear contracts that started operations within the last 12 months.

Terminal and stevedoring revenue grew 11% year-over-year to approximately $4 million. We continue to expect roughly $3 million of incremental EBITDA from these operations on a full year basis.

Specifically, this is recurring revenue business that deepens our integration into customer supply chains beyond ocean freight and it pairs naturally with our Supramax and Handysize fleet. We also advanced our fleet renewal strategy. During the second quarter, we completed the previously announced sale of the 2006 built boar market for $9.6 million. This follows the sale of the Bulk Freedom late last year, also for 9.6 million. And together, these transactions reflect a consistent approach of monetizing older tonnage at attractive values avoiding the capital and off-hire associated with upcoming dry dockings and steadily improving the efficiency and environmental profile of our fleet.

We will continue to selectively and opportunistically invest in modern high-quality vessels that fit our commercial model remaining disciplined on price and transacting only when the returns are clear.

Looking at the market, the demand for drybulk commodities carried positive momentum through the first half of the year, driven by increased trade in both iron ore and grain compared to last year. That strength was broad-based, supporting earnings not only in the larger Capesize segment, but also across the midsize and smaller classes where we are most active, Minor, which are central to our cargo book, likewise, grew compared to the prior year. Encouragingly, this momentum continued into the third quarter.

Our outlook for the balance of 2026 remain positive. At the market level, we expect moderate fleet growth to be broadly offset by comparable ton-mile demand with the continued disruption and lengthening of trade routes translating measured cargo volume growth into stronger ton-mile demand, which is what ultimately drives utilization and freight rates. For Kangi specifically, the second half carries a well-established seasonal tailwind as our high ice class fleet is most active during the Arctic summer trading season, which peaks in the third quarter and take us through the fourth, typically driving our strongest utilization and earnings from the specialized higher-margin trades. Through today, we have booked 4,873 shipping days at a TCE of 2,258 per day for the third quarter.

In summary, our second quarter results highlighted the value of our commercial platform and dynamic fleet positioning. As we enter the second half of the year, our results will further reflect the strategic advantages of our specialized ice class fleet and long-term contracts, which command a durable premium to the market.

Our growing onshore terminal network as a recurring layer of earnings with a long runway ahead and our modern fleet and strong balance sheet lets us fund growth and return capital at the same time. With fundamentals supportive and our strongest seasonal quarters just beginning, we are focused on converting these advantages into sustained earnings growth and lasting value for shareholders.

With that, I'll turn the call over to Gianni to walk through our second quarter financial results.

Thank you, Mads, and welcome to those joining us on the call today. Our second quarter financial results were highlighted by sustained TCE premiums relative to the prevailing market. Second quarter TCE rates were $18,153 per day, a premium of 10% over the average publish market rate of $16,502 per day for Panamax, Supramax and Handysize vessels in the period. Our adjusted EBITDA for the second quarter was $35 million. Our year-over-year increase of nearly $20 million, driven by a 50% increase in TCE rates. Our total charter hire expense increased by 24% compared to the second quarter of 2025 due to an increase in market rates to charter in vessels. Our chartering cost on a per day basis was approximately $16.16 per day in the second quarter.

And through today, we've booked 2,200 days at $17,537 per day for the third quarter. Vessel operating expenses were essentially flat year-over-year. On a per day basis, through the second quarter of 2026, vessel operating expenses, including technical management fees, was $ 6,247 per day, a 2% increase from the prior year.

Total general and administrative expenses increased by 25% and from $7.2 million to approximately $9 million. The increase was primarily due to an increase in incentive compensation expense due to improved results, along with higher compensation costs associated with added head count across the organization as we grow our business. In total, our reported GAAP net income for the second quarter was $10.2 million or $0.16 per diluted share.

Our GAAP net income included a significant unrealized loss resulting from our hedging strategy on bunker fuel exposure. The decline in fuel prices late in the second quarter decreased the fair value of our bunker derivatives. Some of these same derivatives translated into significant unrealized gain during the first quarter as fuel prices increased due to the escalation of the conflict with Iran.

The first quarter's unrealized gain and the second quarter's unrealized loss essentially offset each other, leaving us in a neutral position for the year. More importantly, all of our hedges are placed against our own bunker requirements over the course of the year keeping our fuel cost management aligned with our actual physical consumption. When excluding the impact of the second quarter unrealized loss from derivative instruments as well as other non-GAAP adjustments, However, reported adjusted net income was $16.9 million or $0.26 per diluted share.

Moving on to cash flows. Our strong profitability during the quarter resulted in robust operating cash flow. This, combined with $9.7 million of cash proceeds received from the sale of the Bulkemaka during the quarter drove our unrestricted cash balance to $105 million. At quarter end, we had total debt, including finance lease obligations of approximately $350 million. And to note, our current portion of long-term debt increased to $40 million due to a $24 million balloon payment, which we expect to refinance in the coming months. We are also pleased to announce an increase in our quarterly dividend to $0.10 per share. This increase reflects the strengthening fundamentals and a balance sheet of the business and underscores our commitment to returning capital to shareholders.

Consistent with the disciplined capital allocation strategy we have always followed. Looking ahead, we will continue to allocate capital with a focus on preserving financial flexibility, supporting the growth of our integrated logistics platform and returning capital to shareholders. We remain focused on investments that enhance the durability of our earnings base, including the expansion of our terminal and port service capabilities and ongoing fleet renewal initiatives that improve efficiency, support customer needs and position us for evolving regulatory requirements.

With that, we will now open the line for questions.

[Operator Instructions]

We might be having some technical difficulty as we reconnect our speakers. And do we have our speakers with us yet? Okay. It does look like we do have our speakers back with us. Are you with the speakers?

Yes, we're back online. .

Okay. Okay. Perfect. Just for a moment, and I'm going to get the queue going, I apologize. And we'll start with our first question from Liam Burke with B. Riley Securities.

Mads, you talked about activity in the Pacific region. Is this a new strategy for you? I typically think of your fleet active in the Atlantic with very little activity in Asia. Have you changed your position strategy at all? .

No, I don't think it's a result of that. But of course, we want to grow in that region. And I think just as as a result of our larger fleet and larger scale, we need to take advantage of the opportunities we see out there, and I also earlier in the year, we saw positive momentum, so we may be positioned a little bit more of our ships out there than we've had in the past. So it's a dynamic business, and we'll go where we feel we get the best returns. So it's a combination, I would say.

Okay. Great. Gianni, you talked about a balloon payment due this year. You have plenty of cash. How do you balance refinancing versus just taking a cash balance, paying it down. And I'll throw in the question of raising the dividend and how do you balance everything?

Yes. It's what we look at all the time, Liam. And what we're seeing as far as margins on debt facilities, we're really seeing competitive rates on margins. The market seems to be reacting and there's a lot of opportunities for some well-priced debt. So we're looking at it. The balloon payment I referenced, it's in a joint venture. It's our Nordic Bulk Holding Company joint venture with Glencore. So we will look at that with our partners and decide what to do. But our expectation looking at that one specifically is to roll it out and refinance it.

Cash is -- shipping is volatile. We look at opportunities. We want to be opportunistic. So if we can keep some cash and look at different vessel opportunities as they present themselves and be a little bit more nimble. That's -- I think that's how we think about our capital going forward is really being opportunistic when we see something in the market.

[Operator Instructions] We'll take our next with Poe Fratt with AG Partners.

I'd like to follow up on the comment about the Pacific trade or Pacific region. Are there any particular cargoes that are driving that? And then secondly, can you highlight whether that has continued to enter the third quarter? Or sort of how you look at that over the second half of the year?

I wouldn't say that that it's a specific cargo that sort of drives that growth in earnings. And I do see that we have -- the markets have been balanced a bit in terms of the trading up and the Pacific may be flattening a little bit. So I'm not envisioning sort of in the short term, a huge change to how we employ the ship. It was, I think, more of an opportunistic look at where we could get the best returns in the short term, mainly because the Pacific seems to be a little bit more disruptive from the activities in the Strait of Hormuz than the Atlantic. So we saw an opportunity there. .

Great. And then when you look at your own fleet, you just sold one, what are you seeing opportunities on either side of the equation to either sell assets or buy assets? Can you just give me an idea of what the tone of the S&P market looks like to you right now?

I think it's absolutely a firm. Values are high, and we take answer to that when we are looking at the older ships in our fleet that is coming up against some of the fourth or the fifth special survey and take advantage of that liquid market for our ships in that age group. .

On the other side of it, we are always looking at ships from the second market to add to the fleet. But we are quite determined to only pursue the assets that are attractive to us from a specification and price point. And in the meantime, we can, in the short term at least be sure with a little bit more activity in the part of the business.

Okay. And then can you wouldn't mind highlighting your drydocking activity over the next 12 months, the second half of the year and into the first half of '27?

Poe, I can run through that. It's -- for the second half of the year, we have about 9 more dry dockings to go. And we're estimating about $14 million of costs associated with that. And then next year, we have a little bit of a later year. compared to 2025 and 2026.

So really, it's the second half of this year, maybe early next year, where we have those 9 dry dockings and about $14 million of costs associated.

And at this time, we have no further questions. So I'd like to turn it back to our speakers for any closing comments.

Once again, thank you for joining our call. Should you have any questions, please feel free to contact us at [email protected]. And a member of our team will follow up with you. This concludes our call today.

We'd like to thank everybody for joining the conference today. We appreciate your time and participation, and you may now disconnect.

Good morning. My name is Erica, and I will be your conference operator today. At this time, I would like to welcome everyone to the Pangaea Logistics Solutions First Quarter 2026 Results Conference Call. Today's call is being recorded, and I will be available and will be available for replay beginning at 11:00 a.m. Eastern. The recording can be accessed by dialing (800) 938-2241 for domestic or (402) 220-1121 for International. [Operator Instructions] It is now my pleasure to turn the floor over to Stefan Neely with Vallum Advisors.

Thank you, operator, and welcome to the Pangaea Logistics Solutions First Quarter 2026 Results Conference Call. Leading the call with me today are CEO, Mads Peterson; and Chief Financial Officer, Gianni Del Signore. Today's discussion contains forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties including the risks described in our periodic reports filed with the SEC. Except as required by law, we undertake no obligation to update our forward-looking statements. At the conclusion of our prepared remarks, we will open the line for questions.

With that, I would like to turn the call over to Matt.

Thank you, Stefan, and welcome to those joining us on the call today. We delivered a strong start to 2026 with year-over-year growth across revenue and profitability. Our performance was driven by higher activity, strong market fundamentals and the continued benefits of Pangaea's operating model. In the first quarter, our TCE rates averaged 20% above the prevailing market for the Panamax and heavy size indices. This premium reflects the value of our operating platform, long-standing customer relationships and ability to manage a volatile market effectively across trade routes. .

Total shipping days increased 14% year-over-year, supported by a strong market and our use of chartering capacity to complement our own fleet. Our chartered in fleet increased by during the quarter, allowing us to capture market opportunities without compromising our long-term flexibility. That better market and increased activity translated into meaningful operating leverage. Adjusted EBITDA grew by more than $10 million year-over-year to $25.2 million. We also benefited from the second consecutive quarter of record EBITDA contribution from our terminal, Stevedoring and Port Services operations. We continue to expand our shoreside logistics platform in the first quarter as we began activities in the port of Avancis, Texas and Lake Dansoisiana.

We also expect operations in Tampa, Florida to begin in June. These investments strengthen and deepen the integration of our services across our customer supply chains while creating additional recurring revenue beyond Ocean Freight. We also advanced our fleet renewal strategy. As previously announced, we entered into an agreement to sell the Bushan marker for $9.6 million, and we expect the sale to close during May. This transaction is consistent with our focus on fleet renewal and maintaining an efficient fleet that meets our customers' needs as well as commercial and environmental performance.

We continue to evaluate potential additions to our fleet as part of our disciplined approach to capital allocation. Our balance sheet remains strong, giving us the flexibility to allocate capital towards the growth and modernization of our fleet and the expansion of our port operations while also enabling us to return value to shareholders. We ended the first quarter with $19 million of cash after paying out $3.9 million of dividends during the period. Looking at the market, near-term drybulk fundamentals remain supportive for our mix of minor box stronger Chinese iron imports and the recent improvement in Indonesian coal exports have contributed to a firmer seasonal backdrop and a healthy demand over the medium term.

Limited effective supply growth and continued strong ton-mile demand supports a positive market outlook. Geopolitical developments in the Arabian Gulf have not directly impacted Print as we do not currently have vessels in the region that has not historically represented a significant part of our trade patterns. That said, the broader industry continues to see indirect effects through shifting trade flows and greater volatility in fuel prices. We remain focused on actively managing these risks, and Gianni will provide more detail on our fuel cost management later in the call. At the same time, our flexible operating model has allowed us to respond quickly to changing market conditions. For example, the suspension of the Jones Act created an opportunity for us to support a long-standing customer with a voice between U.S. ports.

The ability to quickly adjust to changing market dynamics and take advantage of opportunities like these are core strength of the Pangia operating platform. As we move through the second quarter, market sentiment remains positive, showing strength ahead of the usually stronger markets in the second half of the year. We are entering this seasonally stronger part of the year with a good visibility, healthier customer demand and continued focus on managing fuel cost volatility. To date, we have booked 4,051 shipping days at a TCE of 8,808 per day for Q2. Overall, we are pleased with our first quarter performance and the momentum we are carrying into the balance of 2026. Our strategy remains consistent, operate with discipline, expand where we see attractive returns, maintain balance sheet flexibility and create long-term value for customers and shareholders.

With that, I'll turn the call over to Gianni to walk through our first quarter financial results.

Thank you, Matt, and welcome to those joining us on the call today. Our first quarter financial results were highlighted by sustained TCE premiums relative to the prevailing market. First quarter TCE rates were $15,252 per day, a premium of 20% over the average published market rates for Panamax, Supramax and Handysize vessels in the period. Our adjusted EBITDA for the first quarter was $25.2 million, an increase of approximately $10 million, driven by a 34% increase in TCE earnings year-over-year. Our total charter hire expenses increased by 122% due to a year-over-year increase in chartering vessels used to complement our own fleet as well as an increase in market rates to charter-in vessels. .

Our charter-in cost on a per day basis was $14,488 in the first quarter of 2026, and through today, we've booked 1,550 days at 16,880 per day for the second quarter. Vessel operating expenses decreased by 7% year-over-year as a result of a decrease in owned days due to the sale of 2 vessels in 2025. On a per day basis, vessel operating expenses, net of technical management fees was $5,644 per day, a 2% increase from the prior year. Total general and administrative expenses increased by 38% from $7.3 million to approximately $10 million -- the increase was primarily due to an increase in noncash stock compensation expense, along with higher compensation costs associated with added head count across the organization as we grow our business.

In 2026, we made a prospective change to our depreciation policy on non-ice class vessels in our fleet to reduce the depreciation period from 30 years to 25 years. This change resulted in $1.6 million of incremental depreciation expense for the quarter. In total, our reported GAAP net income for the first quarter was $13.3 million or $0.21 per diluted share. Our GAAP net income included a significant gain resulting from our hedging strategy on bunker fuel exposure, given the significant increase in fuel prices we've experienced in recent months. As we've discussed in the past, we utilize bunker swaps and options to selectively hedge our exposure to the market on our long-term cargo contracts in forward cargo bookings.

While this approach locks in future cash flows, the mark-to-market unrealized gains or losses can lead to fluctuations in our reported results on a period-to-period basis. When excluding the impact of these unrealized gains from derivative instruments as well as other non-GAAP adjustments, our reported adjusted net income was $7 million or $0.11 per diluted share. Moving on to cash flows. During the quarter, we paid off the remaining balance on the Bulk abaca finance lease for $1.3 million in advance of the sale, as Matt previously mentioned. At quarter end, we had approximately $90 million in unrestricted cash and total debt, including finance lease obligations of approximately $359 million.

Our capital allocation priorities remain disciplined and balanced looking ahead, we will continue to allocate capital with a focus on preserving financial flexibility, supporting the growth of our integrated logistics platform and returning capital to shareholders. We remain focused on investments that enhance the durability of our earnings base, including the expansion of our terminal and port services capabilities and ongoing fleet renewal initiatives that improve efficiency, support customer needs and position us for evolving regulatory requirements.

With that, we will now open the line for questions.

[Operator Instructions] We'll take our first question from Liam Burke with B. Riley Securities.

On Gianni. Matt, you had chartered in vessels up 54% year-over-year. Now that's part of the flexible I mean cargo first strategy, but is there any pressure on you to add vessels rather than continue to charter in No, I wouldn't say that, that pressure such I expected you mean to add owned vessels?.

Yes. I mean we're always looking, right? And but as you say, that sort of increase in the chartered-in fleet when the market is good. And we like the outlook is that will not change depending on how many owned vessels we have in the fleet. So I wouldn't say that we charter in more if we have sold a ship for instance. So the charter then fleet is he primary function of that is an arbitrage against the owned vessels and in market statuses we will always look to take advantage of those opportunities.

Great. And as we move into the summer season, the Arctic activity picks up, are there any geopolitical ripples that will affect your Arctic business during the summer? .

No, I do not expect so. Our businesses in the uptick is between Canada and Europe mainly. And we are gearing up to out that around the same usual time towards the or in early Q3. So that I don't expect and I don't see any disruption there. .

And we'll take our next question from Poe Fratt with AGP Alliance Global Partners.

Gianni, just a quick question on G&A. I know that you talked about head count expansion to support the business model. If I back out noncash comp of $1.7 million, I get a run rate that's about $8.3 million what is that a reasonable run rate for the rest of the year? Or sort of can you give me an idea of sort of how G&A looks for the rest of the year?

Yes. you picked up exactly. One of the issues with G&A for the first quarter is the recognition of noncash stock compensation expense that hits the quarter it's 1.7%. So backing that out, that is definitely something that impacts the first quarter. So removing that, it's more reflective of a run rate for the year. The other item that's in our first quarter and will also impact quarters is the -- its recognition of incentive compensation for the year. So that is a variable component of our G&A that will impact future quarters. But I think subtracting backing out the noncash that's going to be more reflective for the balance of the year. .

Okay. And then when you look at your TCE Mats, for the quarter, you booked just over 4,000 days at close to 19,000 are you currently booking in that range or higher or lower for the rest of the quarter? I'm assuming a little bit higher, but if you can give me some color on what the rest of the quarter might look like. from a TCE standpoint?

Yes. I think it's likely going to be right around there, maybe a tick higher on average, I would guess. I mean we also do have some voyages that we have yet to perform in Q2. But I think you will see that the indices where they're trading at the moment, and that's, of course, around the levels where we are where we are fixing business now. .

Okay. And then sorry. No, go ahead. And then in your remarks, you mentioned the suspension of the Jones Act did that have a is that going to have a more meaningful impact over the rest of the year? Or is it sort of just something that it just happened in the quarter, but it's more just color not actually a meaningful impact?

I would say that it was sort of more on an opportunistic approach. It's a customer that we are working with already have been for a long time. And they had an opportunity that we could work together on something that we would like to do more of as long as it's as long as it remains possible for us to do so. But I wouldn't attribute sort of a sizable contribution from that activity right away. .

Okay. And then just lastly, nice to see a nice bump sequentially in year-over-year in the terminal, terminalling business or Stevedoring, is that a reasonable run rate for the rest of the year? You mentioned another expansion in Florida is what's the rest of the year look like for the terminal Stevedoring business?

Yes, Q1 was in terminal Sepon was definitely 1 of our highest quarters -- we had the addition of 2 port operations that we mentioned previously. And then also in Port Everglades, it was a busy quarter from a dry bulk perspective. We had a really busy quarter that drove I would say, $200,000 to $300,000 of incremental income in that quarter. So Q2, we'll probably see a small decline, about $200,000. And then after that, I expect it to be somewhat like Q1 for the third quarter and fourth quarter. .

Okay. And that's helpful. How about on a margin basis because it's the highest margin that I've seen over the last 2 years or so, close to 30% gross margin is that sustainable? Or I mean, should that sort of moderate over the rest of the year?

Yes, I think some of that is from the dry bulk activity, which does to pay a higher margin, but we expect that to be sustainable for Q3 and Q4. for sure. And then the other thing to point out, Paul, when we think about our terminal and Spider operations, also in our P&L, we have other income below the line. That that is also attributable to our port operations. It's the income on our JVs that are in Gramercy. So that also is part of the income for the quarter. .

Sorry, can I didn't notice that. Is that the $2 million? Or is that I thought that was the interest income was $2 million.

It's the other income, it's about $500,000. I think it's $484,000 in other income. That is a recognition of our ownership interest in Port and Stibor joint ventures. .

[Operator Instructions] We'll take our next question from Clemen Mollins with Value Investors.

Most has already been covered, but I want to touch upon operating expenses what were the key drivers behind the significant quarter-over-quarter decrease. Is this kind of like a sustainable run rate going forward? .

Yes. On OpEx, Clemente, I think the decrease 1 is we sold 2 vessels in the prior year that reduced our total owned days. So driving it from an absolute from an absolute figure has declined. On a per day basis, we're seeing a slight increase. It was I think a 2% increase on a per day basis on the ships but still within reason and our expectation about declining vessel operating expense. So it was what we expected going into the year. And we hope we'll see it continue for the balance of the year.

And I also wanted to ask about your fleet positioning. As you think about fleet renewal or expansion, are you seeing any attractive acquisition opportunities? Where do you currently see the most value?

Yes. I mean, we are positive on the near and sort of medium-term outlook for the markets, and we are always evaluating the opportunities that we see. We can still make sense of those at today's prices, even though they sort of in historic terms are quite high, we have the business to support that. So in the secondhand market, we do expect to be more active there on the buying side over the next year or so. We still see coal there. .

[Operator Instructions] It appears with no further questions in queue, so I'd like to turn it back over to Mads Peterson for any closing comments.

Thank you. Once again, thank you for joining our call. Should you have any questions, please feel free to contact us at [email protected] and a member of our team will follow-up with you. This concludes our call today. You may now disconnect.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. Have a nice day.

Good morning. My name is Chelsea, and I will be your conference operator today. At this time, I would like to welcome everyone to the Pangaea Logistics Solutions Fourth Quarter and Full Year 2025 Results Conference Call. Today's call is being recorded and will be available for replay beginning at 11:00 a.m. Eastern Standard Time. The recording can be accessed by dialing 800-839-5632 domestic or 402-220-2559 internationally. [Operator Instructions] It is now my pleasure to turn the floor over to Stefan Neely with Vallum Advisors. Please go ahead.

Thank you, operator, and welcome to the Pangaea Logistics Solutions Fourth Quarter and Full Year 2025 Results Conference Call. Leading the call with me today is CEO, Mads Petersen; and Chief Financial Officer, Gianni Del Signore.

Today's discussion contains forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the SEC. Except as required by law, we undertake no obligation to update our forward-looking statements. At the conclusion of our prepared remarks, we will open the line for questions.

With that, I'd like to turn the call over to Mads.

Thank you, Stefan, and welcome to those joining us on the call today. I'm excited to speak to you all on my first earnings call as CEO of Pangaea. On behalf of everyone at Pangaea, I want to extend our appreciation and gratitude to Mark Filanowski for his many years of leadership and for helping to facilitate a smooth transition.

During my 16 years with the company, I've been fortunate to be a part of our evolution into a best-in-class operator with a unique and valuable business model. I am incredibly proud of the team that we have assemble and grateful for the opportunity to lead Pangaea into our next phase of multiyear growth and shareholder value creation.

Turning to the fourth quarter of 2025, we delivered solid results supported by strong completion to the 2025 Arctic ice season and stable overall dry bulk demand. Our fourth quarter TCE rates averaged 19% above the prevailing market for Panamax, Supramax and Handysize indices, reflecting the value provided by our niche ice class capabilities and long-term COAs.

Total shipping days increased 26% year-over-year largely reflecting the integration of the Handysize vessels we acquired from SSI at the end of 2024. This expansion drove significant operating leverage. Adjusted EBITDA grew 22% year-over-year to $28.7 million, highlighting the advantages of our integrated logistics model and increased scale.

During the quarter, we also continued investing in long-term strategic differentiation through our integrated logistics platform, which combines specialized shipping with terminals, stevedoring and port services. We commenced operation in Lake Charles, Louisiana and remain on track to launch expanded operations at the Port of Tampa early in the second half of this year.

These investments deepen our customer relationships, enhance recurring revenue opportunities and further integrate Pangaea into our customers' supply chains, creating additional value for our customers.

We also continued to advance our fleet renewal strategy. During the quarter, we sold the 2005-built Bulk Freedom for $9.6 million. Additionally, we recently entered into an agreement to sell the Bulk Xaymaca for $9.6 million. These actions reflect our ongoing commitment to maintaining a modern, efficient fleet aligned with customer needs and evolving regulatory requirements.

We remain disciplined in allocating capital. Our priorities of fleet renewal, organic growth, balance sheet strength and shareholder returns remains unchanged going into 2026.

Throughout 2025, we repurchased approximately 600,000 shares for roughly $3 million and paid approximately $16.3 million in dividends. We ended the year with approximately $103 million in unrestricted cash, supported by strong operating cash flow. Our balance sheet strength gives us the financial flexibility to continue executing on these priorities while navigating the current dry bulk environment.

Near-term dry bulk fundamentals remain constructive for our mix of minor bulk. The resumption of normal trade relations from the U.S. to China has supported activity in the U.S. Gulf, which is an important region for us and the dry bulk market as a whole.

Limited effective supplies growth systemic regulatory constraints support a favorable medium-term outlook. The recent development in the Arabian Gulf does not directly impact Pangaea as we have no ships in the area and it has historically not been a large part of our trade patterns. The industry as a whole is feeling the indirect impact through increased volatility in fuel prices and the disruption of dry bulk trade flows.

Pangaea is uniquely positioned in the Arctic, a region where we have unparalleled operating experience and the largest and most modern high ice class fleet in our market segment. We see renewed geopolitical and commercial focus on the region and over the long term, we expect this attention to be a positive tailwind.

As we progress through the first quarter of 2026, market sentiment remains positive and pricing continued to hold at favorable levels. To date, we have booked 5,920 shipping days at a TCE of $14,917 per day, reflecting healthy demand and an encouraging start to the year.

Pangaea enters 2026 with strong operating momentum, a disciplined and proven strategy and a well-capitalized balance sheet that provides flexibility across cycles. I'm confident in our ability to continue generating consistent value for our customers and shareholders.

With that, I'll now turn the call over to Gianni to walk through our fourth quarter financial results.

Thank you, Mads, and welcome to those joining us on the call today. Our fourth quarter financial results were highlighted by sustained TCE premiums relative to the prevailing market supported by our niche ice class fleet during the peak of the Arctic trade season. Fourth quarter TCE rates were $17,773 per day, a premium of 19% over the average published market rates for Panamax, Supramax and Handysize vessels in the period.

Our adjusted EBITDA for the fourth quarter was approximately $29 million increase of about $5 million, driven by a 25% increase in shipping days and an 11% increase in TCE earned year-over-year. Adjusted EBITDA margin was 17% in the fourth quarter of 2025 and as compared to 13% in the prior year. Our total charter hire expenses increased by 36% compared to the fourth quarter of 2024, primarily due to a year-over-year increase in market rates, to charter in vessels as total charter in days remained relatively flat. Our charter-in cost on a per day basis was approximately $19,100 in the fourth quarter of 2025, an increase of 39% year-over-year, which reflects a similar increase in the average market for Panamax, Supramax and Handysize vessels.

Through today, we've booked 2,543 days at $14,390 per day for the first quarter of 2026. Vessel operating expenses increased by 94% year-over-year, primarily due to the acquisition of the SSI fleet which increased total owned days by 56% as well as incremental costs incurred related to the transfer of eight of our ice-class vessels to Seamar management during the fourth quarter.

On a per day basis, for full year 2025, vessel operating expenses, net of technical management fees was $5,932 per day. Total general and administrative expenses increased by 7% from $6.3 million to approximately $6.7 million. The increase was primarily due to an increase in stock-based compensation expense due to the acceleration of vesting schedules during the fourth quarter of 2025.

In total, our reported GAAP net income for the fourth quarter was $11.9 million or $0.19 per diluted share. When excluding the impact of the gain on sale, unrealized losses from derivative instruments as well as other non-GAAP adjustments, our reported adjusted net income attributable to Pangaea during the quarter was $10.1 million or $0.16 per diluted share.

Moving on to the cash flows. Total cash from operations was approximately $50 million, driven by strong operating performance. At quarter end, we had approximately $103 million in unrestricted cash and total debt including finance lease obligations of approximately $372 million.

During the quarter, our overall interest expense net of interest income was $5.4 million an increase of $1.2 million due to new debt facilities entered into during the third quarter as well as the assumed debt and finance leases associated with the SSI acquisition.

As Mads noted, throughout 2025, we purchased just over 600,000 shares for approximately $3 million and paid $16.3 million in quarterly dividends. Further, in February, we declared a $0.05 per share dividend to shareholders as of February 27 and payable on March 13, 2026. Our buyback program complements our quarterly dividend policy, reinforcing our focus on delivering shareholder returns through a disciplined and balanced approach to capital allocation.

Going forward, we will maintain the same disciplined approach to capital. Our priorities remain clear. preserve financial flexibility, deliver consistent returns to shareholders and invest selectively in opportunities that strengthen our integrated shipping and logistics platform. This includes advancing our terminal and stevedoring operations and continuing our fleet renewal strategy, with a focus on capital efficient initiatives that enhance our ability to meet customer cargo needs and regulatory compliance over the long term.

With that, we will now open the line for questions.

[Operator Instructions] And our first question will come from [ Laura Mayer ] with B. Riley Securities.

My first question, have you been able to leverage your Handysize vessels to grow your onshore port and terminal business?

Laura, thank you for the question. Yes, we are experiencing nice synergies, both between the Handysize fleet and especially our existing Supramax fleet. And we are also in our portal terminals, we have also handled cargoes on several of our Handysize vessels. So that's a nice spin-off between the two activities, yes.

And with the current geopolitics disruption and the tanker market has received a lot of investor attention has the dry bulk sector and Pangaea been affected by recent events in the Middle East?

I think our direct exposure to the conflict in the area is virtually nonexistent. We have no ships in the area we have no ships going there. We have no people working in the region. We have two of our seafarers that were transiting through an airport, but they were able to make it out and make it home safely.

So the direct impact on us is nonexistent. The indirect impact, I think, is mainly being felt through oil price volatility and the potential for even further trade disruption as the materials on the dry side that are moving in and out of the U.S. Gulf need to find alternative routes. So it's still very early in that process to see how that will all shake out. It's still very much uncertain. But on balance, it could have an impact for sure.

[Operator Instructions] And we'll take our next question from Poe Fratt with AGP.

Just a couple of quick ones, a little more detail, please. Can you talk about the impact, the potential impact of fuel prices, bunker fuel and how you manage your forward-looking bunker fuel prices?

Sure. So we manage our exposure to fuel prices primarily in two different ways. The biggest component of that is that several of our larger contracts, especially the longer-term ones have bunker adjustment clauses in them. So the freight is changed depending on the prevalent fuel price at any point in time. So around the time we were performing the shipment. That calculation made that shows the impact of a change in the fuel price and the freight is adjusted accordingly. So our earnings on that contract -- when those contracts doesn't change, really, it's sort of floating the fuel price.

And then for our shorter exposure, we use we hedge through using derivatives. That is not something that is new to us. We have done that for many years. We have to -- when we are operating a business like ours where we have quite a big short-term book that has a fixed rate to it. So that is possible. It's relatively cheap. It's pretty efficient. And I believe on balance is probably a strength for us that we can manage that exposure honestly.

And so -- and my sense is you're protected or you're hedged or insulated from any bunker fuel price increases for, say, the next 6 months to 9 months? Is that fair? And so that you're really exposed as we look into the latter part of 2026 and maybe into '27, if oil prices continue to remain where they are right now and bunker fuel prices have stayed where they are?

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

Okay. So you'll be able to dynamically adjust. What -- in those two buckets that you talked about, Mads, what's the first bucket as far as the overall business? Whether you measure on tonnes moved or revenue or some kind of metric?

When you referred to like the freight?

Yes, the freight to COA business. I'm just trying to appreciate sort of how those two fuel price adjustments, which is more -- which has -- which is more meaningful, I guess?

I would -- I think if I understand your question correctly, Poe, is that you're asking how much of contracted bunker adjustment clauses and how many are hedged with derivatives. Is that your question?

Yes, that would be helpful. Just any way you sort of want to portray it.

Yes. I would argue that we probably in the shorter term, it's probably done through derivatives, probably close to, I don't know, maybe 75%. And as you go out longer, further out, it's done 100% through bunker escalation clauses.

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

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

Okay. So specifically coal out of the U.S. in the backfill any shortfall in LNG out of the Middle East?

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

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

Yes. Well, I can take that. It's -- we -- for Q4, a lot of these just started to come online, but it's really the impact will be for 2026. So we have Aransas, Lake Charles, Tampa and Pascagoula all coming on. So we do expect to step up incremental EBITDA next year, and it's probably around $3 million as for '26 is what we're expecting. In total, just as things start to fall in place throughout 2026, we expect to see that incremental EBITDA for the full year.

Okay. That was an EBITDA number, Gianni? That's correct?

Yes. Correct.

And then can you just talk about the fleet renewal, you sold two assets one per quarter for the last 2 quarters. what's on the front as far as the fleet renewal. Can you talk about both on the buy side and the sell side?

Sure. The decisions around those two transactions are driven primarily through by the age of the vessel. They were both approaching special surveys. One was 22 years, one was 20 years. So that is historically when we have decided to dispose of assets. So that's not really anything new.

We're confidently in the market looking at potential candidates to bring into the fleet. And we are pretty optimistic about both the near-term market outlook and longer term as well. So we expect, of course, to be more active on the -- on that side of the fleet, adding a little bit of capacity as we go.

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

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

Thank you. We have now reached our allotted time for this call. Today's meeting has ended, and we appreciate your time and participation. You may now disconnect.

Good morning. My name is Jamie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Pangaea Logistics Solutions Third Quarter 2025 Earnings Teleconference. Today's call is being recorded and will be available for replay beginning at 11:00 a.m. Eastern Standard Time. The recording can be accessed by dialing 800-839-5492 for domestic or 402-220-2551 for international. [Operator Instructions] It is now my pleasure to turn the floor over to Stefan Neely with Vallum Advisors.

Thank you, operator, and welcome to the Pangaea Logistics Solutions Third Quarter 2025 Results Conference Call. Leading the call with me today is CEO, Mark Filanowski; Chief Financial Officer, Gianni Del Signore; and COO, Mads Peterson. Today's discussion contains forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the SEC. Except as required by law, we undertake no obligation to update our forward-looking statements. At the conclusion of our prepared remarks, we will open the line for questions.

With that, I would like to turn the call over to Mark.

Thank you, Stefan, and welcome to those joining us on the call today. We delivered strong third quarter results, reflecting a seasonally active Arctic trading period and continued progress against our strategic priorities. The third quarter is typically our high watermark for the year given Arctic activity, and this year was no exception. We delivered TCE rates that average 10% above the prevailing market for Panamax, Supramax and Handysize indices, supported by our niche ice class capabilities and long-term COAs. This outperformance occurred against the backdrop of a strengthening dry bulk market during the quarter.

With the integration of the 15 Handysize vessels we acquired from SSI at the end of last year. Shipping days increased by 22% year-over-year, resulting in adjusted EBITDA of $28.9 million, an increase of approximately 20% compared to last year. This underscores the leverage of our integrated model, along with our scale as we maintain our cargo-centric discipline. During the quarter, we further expanded our integrated service platform, which combines specialized shipping with terminal, Stevedoring and Port Services. This platform deepens customer relationships and enhances long-term growth. We commenced operations at the Port of Pascagoula in Mississippi and at the part of Aransas in Texas.

In the fourth quarter, we will begin operations in Lake Charles, Louisiana. Expansion at the port of Tampa, Florida is delayed a bit due to equipment deliveries, but we expect to begin operations early next year. We also continue to advance our fleet renewal strategy. During the quarter, we completed the sale of our strategic endeavor, and last month entered into an agreement to sell the 2005 bulk freedom for $9.6 million. These actions are consistent with our focus on improving fleet efficiency and emissions performance.

As announced last quarter, we also completed the purchase of the remaining 49% stake in [indiscernible] management, our technical operations platform in Athens, giving us more control over technical management and further aligning operational performance with our commercial strategy. Additionally, we closed on the financing for Strategic Spirit and strategic vision totaling $18 million. These financings and enhanced balance sheet flexibility and provide additional capacity to support growth and working capital needs.

On capital allocation, we remain disciplined and continue to prioritize investing in our fleet and organic growth opportunities maintaining a strong balance sheet and returning capital to investors. Through today, we have repurchased approximately 600,000 shares for a total of approximately $3 million. We also declared a $0.05 quarterly dividend, consistent with our prior 2 quarters. We ended the quarter with approximately $94 million in unrestricted cash, supported by strong operating cash flow. Our balance sheet strength allows us to continue executing these priorities while navigating the current dry bulk environment.

Broadly, near-term dry bulk fundamentals remain constructive for our mix of minor bulks with normal seasonality expected as our Arctic activity tapers into quarter 4. Resumed agricultural shipments from the U.S. to China should support U.S. Gulf markets an important region for us. Expected shipping demand for West Africa to China dry bulk movements on larger ships will trickle down to smaller vessels. Limited effective supply growth has systematically [indiscernible] regulatory constraints and confusion support a favorable medium-term setup and our differentiated business model positions us well to deliver premium TCE returns through the cycle. Looking ahead to the fourth quarter of 2025, broader dry bulk market pricing remains buoyant. As of today, we've booked 4,210 shipping days for the fourth quarter generating a TCE of 17,107 per day.

Before I turn the call over to Johnny, I would like to take a moment on a personal note. As announced in September, I will retire as CEO and step down from the Board effective January 1, 2026. He's been a privilege to serve as the Chief Executive Officer of this company for the past 4 years. and to work alongside our talented and dedicated team. Together, we've grown Pangea into a differentiated cargo-focused logistics platform. We've tripled the size of our own fleet and expanded our port and logistics operations to 10 marine terminals across the U.S. Gulf and Mid-Atlantic. Since the passing of our founder, Ed Goal, we have worked tirelessly to further his vision for the company and to position Pangea for sustainable long-term growth. Ed was a real supply chain guy always looking for solutions for its customers. I think you would be proud of what we've accomplished and the foundation we have built for the future.

I have full confidence that Matt Peterson, our current Chief Operating Officer, is the right leader to take Pangea into its next chapter. Matt has over 2 decades of experience in the dry bulk industry has been instrumental in shaping our strategy and operations offers 16-year tenure with Pangea. His deep understanding of our business his relationships with our employees and our partners in all areas of our business and his commitment to our strategy will serve customers and shareholders well.

In closing, I'd like to thank our employees, customers and shareholders for your trust and partnership. I spend an honor to lead Pangea, and I look forward to watching the company continue to thrive under [indiscernible] leadership. With that, I'd like to turn the call over to Gianni to review our third quarter financial results.

Thank you, Mark, and welcome to those joining us on the call today. Our third quarter financial results were highlighted by sustained TCE premiums relative to the prevailing market, supported by our niche ice class fleet during the peak of the Arctic trade season. Third quarter TCE rates were $15, 559 per day, a premium of approximately 10% over the average published market rates for Panamax, Supramax and Handysize vessels in the period. Our adjusted EBITDA for the third quarter was $28.9 million, an increase of $4.9 million relative to the prior year period, and adjusted EBITDA margin increased from 15.7% to 17.1%, reflecting a 22% increase in shipping days with a 13% decrease in voyage expenses on a per day basis.

Our total charter hire expenses decreased by 7%, primarily due to a 13% decrease in charter in days, somewhat offset by higher market rates. Our charter-in cost on a per day basis was 15,387 in the third quarter of 2025, an increase of approximately 6% year-over-year. Through today, we've booked approximately 1,710 days at $16,537 per day for the fourth quarter of 2025. Vessel operating expenses increased by approximately 57% year-over-year, primarily due to the acquisition of the SSI fleet which increased total loan days by 61%.

On a per day basis, vessel operating expenses, net of technical management fees was $5,634 per day. Total general and administrative expenses increased by 64% from $6 million to approximately $9.8 million. The increase was primarily due to the consolidation of our technical management operations, timing of recognition of incentive compensation year-over-year as well as growth related to the SSI fleet acquisition. In total, our reported GAAP net income for the third quarter was $12.2 million or $0.19 per diluted share. When excluding the impact of the unrealized losses from derivative instruments as well as other non-GAAP adjustments, our reported adjusted net income attributable to Pangea during the quarter was $11.2 million or $0.17 per diluted share.

Moving on to cash flows, total cash from operations was approximately flat year-over-year at $28.6 million, driven by strong operating performance and cash generated from working capital. At quarter end, we had approximately $94 million in unrestricted cash in total debt, including finance lease obligations of approximately $386 million. During the quarter, our overall interest expense was $5.6 million, an increase of $1.7 million due to new debt facilities entered into during the third quarter as well as the assumed debt and finance leases associated with the SSI acquisition.

As Mark mentioned, during the third quarter, we completed financing of the strategic spirit for $9 million payable over 7 years at an interest rate of SOFR plus 1.95% and the strategic vision for $9 million payable over 5 years an interest rate of SOFR plus 1.95%. The financings closed in July and September, respectively, and provided $18 million in cash that we intend to utilize for working capital and strategic investments. In addition, we continue to execute on our share repurchase program, buying back approximately 200,000 shares during the third quarter at an average price of $4.96 per share. Since quarter end, we've bought back an additional 200,000 shares, bringing our total to approximately 600,000 shares. Our buyback program complements our quarterly dividend policy reinforcing our focus on delivering shareholder returns through a disciplined and balanced approach to capital allocation.

Going forward, we will maintain the same disciplined approach to capital allocation. Our priorities remain clear. preserve financial flexibility, deliver consistent returns to shareholders and invest selectively in opportunities that strengthen our integrated shipping and logistics platform. This includes advancing our terminal and [indiscernible] operations and continuing our fleet renewal strategy with a focus on capital-efficient initiatives.

With that, we will now open the line for questions.

[Operator Instructions] We'll go first to Poe Fratt with AGP.

Mark, fair winds and following -- or fair season following wins. So congratulations on your retirement...

It was Richard Nissen, who said, Paul, you're going to miss me. You won't have me to kick around anymore.

Well, I'm not sure he's been kicking you, but -- so congratulations. And then, Matt, just if you could -- you're not in the seat yet, but can you just highlight sort of a couple of your priorities, any changes that we might see maybe give us their top 3 priorities going forward?

Thanks, Poe, great question. I mean, we are definitely not looking at anything revolutionary here. Mark and I and Johnny and Dan as well and the record team here, we haven't worked on our strategy together. It is never a one-person project. So we just wanted to essentially more the same, grow the platform the way it is now. So that is about the customers, growing the customer price growing our logistics and postal terminals offering and then also, over time, of course, when the opportunities present so we want to grow the number of ships in our fleet as well. So it's simply about execution for me. There will be, of course, tweaks along the way as there always is, but for sure, nothing revolutionary. So it's about running the company. efficiently and then growing the platform as we go.

Great. And then when you look at your forward cover I think it's over 4,000 days at 17,000. Can you -- what do you think the premium to the index does in the fourth quarter compressed a little bit in the third quarter, I think probably just because of the large trade fed rates and then also the market improved over the course of the quarter. So would you expect the premium to expand in the fourth quarter -- and then also, typically, the third quarter is your highest -- high watermark for the year, but it doesn't look like that's going to be the case this year, and it looks like fourth quarter is going to be higher than the third quarter. Can you just talk about sort of the rate environment for the fourth quarter?

Yes. So I think in terms of the Arctic business, some of that actually spends a little bit into Q4 for us. But it was -- Q3 is sort of developed in a way that is not uncommon for us when you are the backup of a rising market, right? The ships are all performing voyages that have to be completed before they are repriced. And additional, we do have some short-term commitments that our margin contracts on. So that's not a normal in a rising market. I think Q4 is not done yet. We haven't fixed all our exposure there. However, I do think that over time, the premiums will probably for sure, the expectation is that they go towards some that you normally see in our business in Q4.

Great. And then you sold another older super. Can you sort of talk about your fleet renewal program in the context of asset values even for older assets are holding up pretty well. Is 2026 could be as active as 2025 as far as fleet renewal on the sales side?

We'll have to see what opportunities present themselves. We have a pretty pragmatic approach to decisions around sales, right, where we're looking at as is the case for the [indiscernible] when the ship is approaching 20 years old and the investments you have to do versus what we can replace that ship with. So we're always looking at that. I think in terms of prerenewal, we're always looking. I don't think we are necessarily deterred by the current market conditions in terms of values or stock market be. So I still think that, especially in the Ultramax segment, there are opportunities. It's all about finding the right one with a little bit petty when it comes to the ships that we want to bring into the fleet, but we for sure long term don't want to have a shrink increase, that's for sure. So prerenewal should sort of keep our costs at close is must. And then the question of that is where the expansion is in the costs.

[Operator Instructions] We have no further questions at this time. I'd like to turn the floor back over to Mark Filanowski for any additional or closing comments.

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

Thank you. Once again, ladies and gentlemen, that will conclude the day today. Thank you for your participation. You may disconnect at this time, and have a wonderful rest of your day.