Good morning. My name is Laurie and I'll be your conference operator today. At this time, I would like to welcome everyone to the Pangaea Logistics Solutions’ Fourth Quarter 2019 Earnings Teleconference. Our host for today's call are Mr. Ed Coll, Chairman and Chief Executive Officer; and Mr. Gianni Del Signore, Chief Financial Officer.Today's call is being recorded and will be available for replay beginning at 11:00 AM Eastern Time. The recording can be accessed by dialing 800-585-8367 for domestic or 404-537-3406 international and referencing ID number 9578734. All lines are currently muted. And after the prepared remarks, there will be a live question-and-answer session. [Operator instructions].It is now my pleasure to turn the floor over to Tiya Gulanikar with Prosek Partners.

Thank you, Laurie. And thank you for joining us for this morning's fourth quarter 2019 earnings conference call for Pangaea Logistics Solutions. With us today from the company are Chairman and CEO, Mr. Ed Coll; and Chief Financial Officer, Mr. Gianni Del Signore. Before I turn the call over to Ed, I'd like to read the Safe Harbor statement.This conference could contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Pangaea Logistics Solutions. Forward-looking statements are statements that are not based on historical facts. Such forward-looking statements are based upon the current beliefs and expectations of Pangaea Logistics Solutions’ management and are subject to risks and uncertainties which could cause the actual results to differ from the forward-looking statements.Such risks are more fully discussed in Pangaea Logistics Solutions’ filings with the Securities and Exchange Commission. The information set forth herein should be understood in light of such risks. Pangaea Logistics Solutions does not assume any obligation to update the information contained in this conference call. Also, please recall that a supplemental slide presentation will accompany this call. Those slides can be found attached to the 8-K that was filed with last evening’s release, which is available on the Investors section of www.pangaeals.com under Company Filings, or on the SEC’s website at sec.gov.Now, I would like to turn the call over to Pangaea Logistics Solutions’ Chairman and CEO, Mr. Ed Coll, Ed?

Thanks, Tiya, and good morning to all of you and thank you for joining us on the call. This morning, I’ll provide an update of our operations and the overall market before turning the call over to Gianni, our CFO, to provide a more detailed overview of the fourth quarter financials. We will then open the line for questions.Before I address our results and talk about our fiscal year 2019, please allow me to talk about the impact coronavirus has had on our market and the way we're approaching that. I think it is the very difficult time for all of us. I hope you and your families are safely waiting out the storm. Across all of our offices, we're taking every precaution and I’m mostly working from home, which is familiar territory for most of our people as this is a 24X7 business in the best of times.Overall, our position in the shipping market for now is attempting to be resilient to the impact of this global pandemic. After a week start to the year, minor bulks are now moving and perhaps delays in certain points and certain ports to the virus response has tightened supply just a little. However, we're prepared for a downturn if it comes, which may be inevitable, which much of the world economy closing down at the same time, we can only hope for a quick recovery.Our Board has wisely deferred the decision on our next dividend payment and we have assisted buying more ships to replace those we have sold over the past few months. We will use our flexible business model to quickly adjust our charter in risk as we feel the market moving. We'll continue to work closely with our customers to support their businesses and we will try to conserve…

Thank you, Ed, and thank you all for joining us on today's call. Again, we hope everyone remains healthy and safe in this unprecedented time and truly appreciate everyone taking the time to join us. Before walking through our financials, I'd like to expand upon Ed's earlier comments about our business strategy.Of course, this is not the market we'd like to be in. However, as we said in the past, our business model is built to protect the downside, as it did in 2016 and as we navigated the decline during the fourth quarter and into 2020. While we recorded a book loss during the fourth quarter related to vessel sales and impairments, we were able to sell four of our older vessels at very good prices right before the market collapsed. Our goal, as Ed noted, is to renew our fleet and lower our average age, which we have reduced from 13 years down to nine years.As the market collapsed and interest rates fell steeply in March, we capitalized on a lower rate environment to improve our cost of capital, fixing interest rates on the Bulk Endurance, Bulk Pride and Bulk Independence debt facilities.In addition, in January, we accelerated our purchase option on the Bulk Beothuk finance lease facility to pay off one of our most expensive facilities. We were very active in 2019 with vessel acquisitions, opportunistically identifying ways to strengthen our balance sheet and extending contracts with key customers. In 2020, our capital allocation strategy will remain tied to our fleet renewal and opportunistically acquiring new vessels when we feel the time is right. And from a revenue standpoint, we'll continue sourcing value added projects to preserve and enhance our customer relationships.And as Ed noted, to maintain our strong footing in these extremely uncertain times, we have…

Thank you, Gianni. As you can see from our results and the various initiatives we took this year, we're well positioned to address the uncertainty presenting -- presently facing us. Longer term path forward for Pangaea is clear and we're well positioned. We thank our customers, business partners and shareholders for their continued commitment and partnership, and we look forward to updating you further in coming quarters.I'll now open the floor for questions.

[Operator Instructions]. Your first question comes from the line of Poe Fratt of Noble Capital Markets.

Good morning, Ed. Good morning, Gianni. Ed, I was hoping you would expand on your comments about the current market conditions. I thought I heard you say that the year started off pretty on a week note, maybe seasonally too, and then it's picked up. Could you help us -- or could you help me understand sort of where we stand right now and sort of it’s like 70% of last year? Or sort of is there any sort of benchmark that you could point me to, to sort of understand where the market stands right now? And then also if you could talk about your cargo book and whether you're seeing any change in either volume or pricing in the cargo book?

Okay. So I think, you’ve to look at it two ways. Number one, if you put the corona thing out of it, right? That's one way of looking at. And if you add it then, it's another way. I mean fundamentally there's not that many ships. The supply demand situation was pretty healthy, okay. And now we have this disruption and we are not quite seeing it reflected, except because we're not cape operators, right? If you're in a cape size business and the raw material business, steel mills, et cetera, you are in a world that [hurt]. That's not our business.So beyond that, it’s been fairly resilient. We do see a lot of interesting things on the ground happening, that this whirlwind of the corona has just stopped the economies. And so I think unfortunately, we are going to see some fallout from that in the general marketplace. And it's okay, because in the end, it's going to create all sorts of opportunities for us, because we're solid and we have good relationships and contracts. And a lot of the things we're doing, a lot of project bases that we hope will come to fruition in the next few months.But fundamentally, our contracts support our ships that we have on the water. We were fortuitously able to sell four ships before this mess happened. And we have reduced the age of our fleet and we ordered those ships in 2019 against contracts. And I think in this stage, what you have to end up looking at is not just your client, but their clients. So you have to understand how everything all fits together. For example, our backend clients. I think their cost of production with our new project will get down toward $20 a ton. So -- and they're selling at $90 a ton in China, and they get a premium of 20% for their quality on top of that. So I think that's safe in that example. The aluminum business, which we do with Noranda, we took over their stevedoring operation. We invested into cranes there. It’s a small capital for us, a very good business. And the aluminum business is actually pretty resilient.So, I think that when we get through this situation, which we will get through, right, whether it's two weeks or six months, it will happen, we're going to get an explosion of demand. That's my opinion.And so where we’re right now, we would like to sell one more ship, an older ship, and we would like to pick up a couple of ships, taking advantage of people who need to sell. So, I think fundamentally, we have our cash. We have a good operating business, continue to make money. So, we're in the best situation that I can imagine across -- certainly across our competitors.

And can you sort of update us on the progress on the new builds and any concern about what's going on and China as far as just maybe some -- have the ship -- have your projects been impacted at all by some of the slowdown? It seems like you're coming out of the shipyards in China?

Well, I think this is really interesting for a lot of reasons, okay? So I spend my mornings talking to all our guys around the world and what's going on. And in China, we -- they did have a problem, okay? But now pretty much everyone is back to work, and they're doing what they need to do. We were asked early on with the Chinese, with the shipyard, they said, can you help us? Can you give us masks? Can you do all these things for us? And we did, we sent them at least about $15,000 worth of equipment to help them. And now they turned around, they say, we don't need it. Do you want it back? Right? So that tells you the story about what's going on in Asia. And of course, certainly in China, they can be a lot more rigid than we can in United States about -- and Europe about how you treat your people. But it kind of gives you hope that we can get through this. But everything seems to be coming back there in China, and they also are stimulating their economy. And here, we're obviously going to do that, stimulate the economy and flow everything with the kitchen sink into the mix. And so we will get through it.So there's no problem out there for the new buildings. You can see that there will be pent up demand. With the minor bulks what we see is every day there's more and more things that people want to do. They're being restrained by the current situation, but things are moving. And so -- and -- but I think it will get worse in our market before it gets better. That's just our sense of that. People have to move things by ocean and that's okay. We see no change really except for short-term in the project business. That's not going to -- it's not going to change. And people need to do things. And we're well positioned to take advantage of that.

And would you -- your model allows you to flex with your charter-in activity. Can you -- and it's -- Ed just you mentioned it was higher above average over the second half of the year. Can you give us some color on how your charter-in activities evolved over the course of the year and looking into maybe the second quarter?

Well, I think, as you know, what we try to do is everything with our charter-in business is based around backlog cargoes, right, so to eliminate our risk and backhaul and short period, and this optionality idea. So I think our program now probably in the near term will be not to take the money out of those charters and go down a little bit further, when the number -- in the number of ships, I think that's probably the right thing to do, and then come back. At the same time, we're looking at longer term opportunities on the charter side. It doesn't take a lot. I think it's finding people, tonnage providers, let’s say that are stressed in order to find -- and they're not really commercial people. It's the two guys and a dog type scenario, that are asset players. I think that we will look carefully to find the opportunities there. But in the near term, we won't take the risk I think of keeping ships on if we don't believe in the short-term that the market is going to support it. We'll probably just take the cash and hunker down.

And can you give me an idea of how many vessels you've chartered-in right now or just sort of a ballpark number?

Yes, I think we're -- it's about 40 give or take. And as you know it changes every day because they're coming and going. And we don't have long-term commitments on chartered ships. And those that we have long -- let's say longer term payments on are index based. And that's okay with us because as you know we can -- we continually outperform the index quite a bit. So that -- but we were not -- we own ships as you know, but it's not -- the ice ships are very specific to a trade. And we have a lot of focus on that. Half the ships that we actually own are ice ships and the other ships are commodities. We need to own a fleet of ships to be able to service our clients, and we do some difficult cargoes and work in some difficult places. So it requires us to own a certain percentage of our ships. We don't believe in the model. The total asset-light model, we don't believe in it. Not really, because we think you can only be so smart so long before you get whacked. And that's historically in this business for 40 years I've seen it happen over and over. So, having a balance where we can have 20%, 25% of our ships that are owned and controlled in a balanced charter, I think that's -- it's a good rule of thumb.

And Gianni if you wouldn't mind, a couple just follow up questions on -- it looks -- did the Patriot’s -- when did the Patriot sale close? Was it in the fourth quarter or the first quarter of 2020 or hasn't closed yet?

Yes, so she was held for sale as of December 31st on our balance sheet. The sale closed in February.

Okay. And then also you sold the Barents?

Yes, that was our Handy one, correct. That was also sold within the first quarter.

Yes, in February too I think or?

It was a little bit earlier but it was early in the first quarter ...

And then you said you fixed some of the rates on I think the book, Beothuk and the Pride and the Independence. Can you give us -- give me a flavor on where you fixed?

Sure. So there are two things. We fixed interest rates on one of our facilities and we exercised the purchase option early on the Bulk Beothuk. So the Bulk Beothuk was financed under a finance lease arrangement, as you recall, I think about two years ago we sold her sale leaseback. The first purchase option was available to us in May of this year. But we accelerated that and exercised our option to -- or essentially pay off the lease in January. So we did that and she was unfortunately one of our highest interest -- one of the highest interest bearing facilities that we had. So we thought we could get out of that facility and then reduce our interest cost on that one.And then the other one that we did was with the facility we had with NIBC Bank. It's broken up across three vessels, the Bulk Independence, the Bulk Pride, and the Bulk Endurance. So there's three different tranches that we fixed over the course of March. Early March, we locked in the interest rates across those three tranches.

And essentially with LIBOR plus 2.40 I think or maybe…?

Right now, they were floating at LIBOR plus 1.7 for the first eight quarters of the loan. It increases to LIBOR plus 2.4 after the eighth quarter through the duration of the facility. So we fixed the LIBOR portion in the low 1s for the duration of the facility now.

For the duration okay.

Yes.

And then, how much was the finance lease buyout?

It was a 5.5 million.

And then when you look at the shift from -- I guess the -- not declaring the dividend this quarter and reviewing it per quarter or each quarter and then the implementation of the stock buyback, what would get you to declare the dividend again? Can you just sort of walk us through sort of what you’re thinking on that is? Is it a permanent hold or it’s something that, if we do see the pent up demand materialize over the second half of the year that you'd be more inclined to declare the dividend?

No, I think it's a defensive move, right? And to me what it means is, there's so much uncertainty out there. We're better off hoarding our cash, right? I think that's because we will have a better use for it. I mean, as Gianni said, with -- when you're going out to borrow money, it's almost free and that's probably going to stay that way for a little bit. But we want to hoard our cash and look for opportunities. That's number one. And it's very cloudy out there at the moment. And we want to make sure that we're not in a situation that there's problems that we have to deal with.At the same time, we will buy back shares if that's the right thing to do. But we really don't have any immediate plans to do that, because it's counterintuitive. We would rather keep the cash for the time being. We know we have to replace a couple of the ships that we sold and that probably buy back at cheaper prices. So our timing was fortuitous there with what we did. But coming back to the dividend, yes, sure, if there's some stabilization, we'll consider reinstating it. But that'll be quarter-by-quarter.

And it's interesting for us. How much lower do you think you could reacquire the vessels at this point in time? Is it order of magnitude 10%, 20%? And can you sort of give me an idea of how much asset values might have dropped?

Okay. Well, just thinking about what the right percentage is. I would say just intuitively, it's probably something like 15% so far. But when we buy a ship, we look at it completely differently. And we don't want to buy -- we want to buy a good ship, which generally means for us buying a Japanese built ship, and we want to buy a more modern ship. As I mentioned, we're going down from 13 years down to 9 years, and I think we would like to focus in that range probably something from 2011-2015 and take advantage of that piece of it. And we just want to buy a good ship, right? So it's like buying a used car from the old lady who goes to church on Sunday. That's where you end up. So, it’s not like we're going out and buying a fleet, we just need a couple of ships. So -- and when something will fall into our lap, we inspect regularly, but we're not going to buy junk, we're not going to buy Chinese built ships which a lot of people got in trouble doing.

At this time, there are no further questions. I’d now like to turn the call to management for any additional or concluding remarks.

Okay, well, thank you everyone for joining us this morning and stay safe for you and your family.

Thank you. That does conclude today's conference call. You may now disconnect your lines and have a wonderful day.