Paragon Shipping Q2 2013 results presentation

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Paragon Shipping Q2 2013 results presentation

  1. 1. Earnings Conference Call Second Quarter & 6 Months Ended June 30, 2013
  2. 2. Slide 2 This presentation contains certain statements that may be deemed to be “forward-looking statements” within the meaning of the Securities Acts. Forward-looking statements reflect management's current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements, which are other than statements of historic facts. The forward-looking statements in this presentation are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, managements' examination of historical operating trends, data contained in our records and other data available from third parties. Although Paragon Shipping Inc. believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, Paragon Shipping Inc. can not assure you that it will achieve or accomplish these expectations, beliefs or projections. Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of the world economies and currencies, general market conditions, including changes in charter hire rates and vessel values, changes in demand that may affect attitudes of time charterers to scheduled and unscheduled drydockings, changes in our vessel operating expenses, including drydocking, crewing and insurance costs, or actions taken by regulatory authorities, ability of our counterparties to perform these obligations under sales agreements and charter contracts on a timely basis, potential liability from future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents and political events or acts by terrorists. Risks and uncertainties are further described in reports filed by Paragon Shipping Inc. with the Securities and Exchange Commission. Forward Looking Statements
  3. 3. Slide 3 Agenda 2Q 2013 Highlights Company Update Drybulk Industry Overview Financial Update Investment Summary
  4. 4. Slide 4 Highlights - 2Q 2013 Financial Performance: • Net Revenue: $13.9 m. • EBITDA: $6.2 m. • Net Income: $17,032 Signed a $69.0 m. credit facility with China Development Bank to partially finance our two 4,800 TEU containerships currently under construction Subsequent events: In July 2013, we agreed with the charterer of the M/V Coral Seas and the M/V Deep Seas on the vessels’ early redelivery for a total cash compensation of $2.3 m. On August 5, 2013, Box Ships prepaid an amount of $5.0 m. Currently, the outstanding balance of the respective loan is $6.0 m.
  5. 5. Slide 5 1) Subject to certain conditions and contingencies 2) As of August 5, 2013 3) Including newbuilding deposits, KLC Shares, loan to Box Ships and M.V. adjusted investment in Box Ships Leverage Ratio (2) Financing Update Cash (including restricted cash) $ 25 m Total Debt $ 187 m Net Debt $ 162 m M.V. Adjusted Net Worth (3) $ 106 m Total Capitalization $ 268 m Net Debt / Total Capitalization 60% Leverage ratio of 60% Financing of the Company’s outstanding newbuilding program: • $25 million remaining under Nordea Facility (Hull no. 625) • $69 million new credit facility with CDB (1) (Hull no. 656 & 657) Scheduled Loan Repayments (USD Million) 191.9 188.3 184.7 181.1 3.6 3.6 0.8 2.8 3.6 $150 $160 $170 $180 $190 $200 $0 $2 $4 $6 $8 $10 Q113 Q213 Q313 Q413 Debt O/S Loan Repayments settled Loan Repayments O/S
  6. 6. Slide 6 Chartering Update (1) Assumes earliest redelivery dates Fixed Days Optional Period Open Days NBs Priceless Seas OntheWater Golden Seas Calm Seas Friendly Seas Pearl Seas Coral Seas Deep Seas Precious Seas Fixed Revenue Days ( 1) 37% Hull No. 657 Proud Seas Hull No. 656 0%0%4% 2016 Q1 Q2 Q3 Q4 2015 Q4Q2 Q3 Remainder 2013 Q3 Q1 2014 Q1 Q2Q4 Q1 Q4Q3 Kind Seas Prosperous Seas Sapphire Seas Q2 Diamond Seas Dream Seas Spot exposure – significant upside potential
  7. 7. Slide 7 Chartering Performance Consistently beating market since 2009 Source: Clarkson’s Research USDPerDay (USD per day) 2009 2010 2011 Q112 Q212 Q312 Q412 Q113 Q213 PRGN TCE Rate 30,942 25,911 21,312 14,030 11,866 11,574 10,563 11,388 10,476 BPI (average TC routes) 19,295 25,041 14,000 7,983 9,630 6,640 6,553 7,055 7,775 BSI (average TC routes) 17,338 22,456 14,405 8,679 11,178 10,301 7,626 8,084 9,319 BHSI (average TC routes) 11,291 16,427 10,552 6,925 9,188 8,018 6,415 6,878 7,987 0 8,000 16,000 24,000 32,000 2009 2010 2011 Q112 Q212 Q312 Q412 Q113 Q213 PRGN TCE Rate BPI (average TC routes) BSI (average TC routes) BHSI (average TC routes)
  8. 8. Slide 8 0 10 20 30 40 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Capesize Panamax Supramax Handysize Linear (Capesize) Linear (Panamax) Linear (Supramax) Linear (Handysize) 0 10,000 20,000 30,000 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Capesize Panamax Supramax Handysize Drybulk Market Average T/C Routes (USD Per Day) Source: Clarkson’s Research TC Rates: Recovered in Q213, but still remain close to breakeven levels Asset Values: Sentiment is improving - vessel values increasing 5 Year Old Secondhand Prices (USD Million)
  9. 9. Slide 9 Demand Fundamentals Drybulk market growing by 6.3% CAGR in volumes through 2016 Source: Pareto Shipping Research 2006 2007 2008 2009 2010 2011 2012 2013f 2014f 2015f 2016f Contribution to total growth Iron Ore 710 779 858 916 997 1,062 1,131 1,225 1,324 1,425 1,531 33.7% Met Coal 203 216 227 206 258 246 269 298 326 354 384 9.5% Steam Coal 916 968 1,016 1,060 1,188 1,297 1,394 1,490 1,589 1,691 1,797 33.8% Grain 282 300 309 322 330 338 352 353 367 379 392 4.3% Steel Products 329 349 350 267 314 338 347 367 393 420 449 9.0% Phosrock 33 34 32 28 29 33 34 34 34 35 36 0.2% Alumina / Bauxite 80 84 86 67 80 92 97 100 103 106 110 1.1% Other 502 529 516 476 552 588 608 624 649 674 702 8.4% Total 3,055 3,259 3,394 3,342 3,748 3,994 4,232 4,491 4,785 5,084 5,401 100.0% Growth 6.7% 6.7% 4.2% -1.5% 12.2% 6.6% 5.9% 6.1% 6.5% 6.3% 6.2% MillionTonnes -4% -2% 0% 2% 4% 6% 8% 10% 12% 14% 0 1,000 2,000 3,000 4,000 5,000 6,000 2006 2007 2008 2009 2010 2011 2012 2013f 2014f 2015f 2016f Iron Ore Met Coal Steam Coal Grain Steel Products Phosrock Alumina / Bauxite Other Growth
  10. 10. Slide 10 0 20 40 60 Remainder 2013 2014 2015+ Capesize Panamax Supramax Handysize 0% 25% 50% 75% 100% 0 200 400 600 800 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Global Fleet Orderbook Orderbook as a % of Global Fleet Supply Fundamentals Source: Clarkson’s Research MillionDwt Outstanding Orderbook by Vessel Type Global Fleet vs Orderbook Drybulk orderbook is contracting – currently stands at 18% of existing fleet Full year 2012: 99 million dwt delivered vs 34 million dwt scrapped (or 34%) H113: 35 million dwt delivered vs 13 million dwt scrapped (or 37%) MillionDwt Deletions vs Newbuilding Deliveries 55 m 42 m 28 m 99 34 65 0 50 100 150 Full Year 2012 Deliveries Deletion Net Growth 11 4 7 5 5 3 35 3 3 2 2 2 2 13 8 1 5 4 3 2 22 0 10 20 30 40 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 H113 Deliveries Deletion Net Growth
  11. 11. Slide 11 Financial Performance – 2Q & First Half 2013 Q2 2013 Q2 2012 H1 2013 H1 2012 Average No. of Vessels 13.0 10.8 12.8 10.4 Time Charter Equivalent rate $ 10,476 $ 11,866 $ 10,930 $ 12,910 Fleet Utilization 100.0% 99.3% 99.9% 99.5% Net Revenue $ 13.9 m $ 11.9 m $ 27.3 m $ 24.4 m EBITDA $ 6.2 m $ 6.3 m $ 8.7 m $ 13.0 m Adjusted EBITDA $ 6.1 m $ 6.6 m $ 9.3 m $ 13.7 m Net Income / (Loss) $ 17,032 $ 0.2 m ($ 3.5 m) $ 0.9 m Adjusted Net (Loss) / Income ($ 0.1 m) $ 0.5 m ($ 2.9 m) $ 1.6 m Earnings / (Loss) P.S. $0.00 $0.03 ($0.31) $0.15 Adjusted (Loss) / Earnings P.S. ($0.01) $0.08 ($0.26) $0.26
  12. 12. Slide 12 Investment Summary Drybulk Market • 2013 remains challenging, but a recovery is in sight. • Increased scrapping and reduced orderbook will speed up recovery. • A gradual recovery starting in early 2014 is expected. Paragon Shipping Inc. • Financing & Debt Exposure: Debt restructuring completed. Reduced Debt repayment requirements and obtained waivers. Agreed with CDB for a $69 million credit facility to partially finance the two containership newbuildings. Current leverage ratio of 60%. • Fleet Growth: 3 Handysize newbuildings delivered, 1 expected in Q413. • Diversification: Exposure to Containership Sector through ownership of 13.8% of Box Ships. • Chartering: Well positioned to take advantage of the market when the recovery begins.
  13. 13. Investor Relations /Media: Allen & Caron Inc. Rudy Barrio (Investors) Tel: (212) 691-8087 Email: r.barrio@allencaron.com Len Hall (Media) Tel: (949) 474-4300 Email: len@allencaron.com Company: Paragon Shipping Inc. Robert Perri, CFA Chief Financial Officer 15 Karamanli Ave. GR 166 73, Voula, Greece Tel: +30 (210) 8914 600 Email: ir@paragonshipping.gr
  14. 14. Slide 14 Appendices
  15. 15. Slide 15 Non-cash recurring Statement of Operations – 2Q 2013 Non-cash recurring Adjustments Adjusted (US$ 000's) 3 Months Ended 3 Months Ended 3 Months Ended Jun. 30, 2013 Jun. 30, 2013 Jun. 30, 2013 Revenue Charter revenue $14,684 $14,684 Commisssions (806) (806) Net Revenue 13,878 13,878 Expenses / (Income) Voyage expenses, net 1,988 1,988 Vessel operating expenses 5,514 5,514 Dry-docking expenses 1,227 1,227 Management fees - related party 1,187 1,187 Depreciation 4,251 4,251 General & administrative expenses 1,611 194 1,417 Bad debt provisions (17) (17) Gain from marketable securities, net (3,113) (3,113) Total Operating Expenses 12,649 194 12,455 Operating Income 1,229 194 1,424 Other Income / (Expenses) Interest and finance costs (1,860) (1,860) Gain / (loss) on derivatives, net 35 (271) (236) Interest income 168 168 Equity in net income of affiliate 410 410 Foreign currency gain 34 34 Total Other Expenses, net (1,212) (271) (1,484) $17 ($77) ($60) Weighted av. number of shares, basic 11,041 11,041 11,041 Weighted av. number of shares, diluted 11,134 11,134 11,134 $0.00 ($0.01) ($0.01) Net Income / (Loss) Earnings / (Loss) per Common Share
  16. 16. Slide 16 Statement of Operations – 1H 2013 Non-cash Non-cash recurring Non-cash recurring Adjustments Adjusted (US$ 000's) 6 Months Ended 6 Months Ended 6 Months Ended Jun. 30, 2013 Jun. 30, 2013 Jun. 30, 2013 Revenue Charter revenue $28,909 $28,909 Commisssions (1,578) (1,578) Net Revenue 27,332 27,332 Expenses / (Income) Voyage expenses, net 2,653 2,653 Vessel operating expenses 10,595 10,595 Dry-docking expenses 1,698 1,698 Management fees - related party 2,683 336 2,347 Depreciation 8,385 8,385 General & administrative expenses 5,222 336 4,886 Gain from marketable securities, net (3,113) (3,113) Total Operating Expenses 28,124 672 27,452 Operating Loss (792) 672 (120) Other Income / (Expenses) Interest and finance costs (3,761) (3,761) Gain / (loss) on derivatives, net 20 (509) (489) Interest income 394 394 Equity in net income of affiliate 979 979 Loss on investment in affiliate (391) 391 - Foreign currency gain 57 57 Total Other Expenses, net (2,702) (118) (2,820) ($3,494) $554 ($2,940) 11,017 11,017 11,017 ($0.31) $0.05 ($0.26) Net Loss Loss per Common Share, basic & diluted Weighted av. number of shares, basic & diluted Non-cash
  17. 17. Slide 17 Statement of Operations Adjustments Adjusted EBITDA Reconciliation Adjusted Net Loss (60) (2,940) Plus Net interest expense, including swap interest 1,928 3,856 Plus Depreciation 4,251 8,385 Adjusted EBITDA 6,119 9,301 3 Months Ended 6 Months Ended Jun. 30, 2013 Jun. 30, 2013 Adjusted Net Loss Reconciliation (US$ 000's) Net Income / (Loss) 17 (3,494) Loss on investment in affiliates - 391 Unrealized gain from interest rate swaps (271) (509) Share based compensation 194 672 Adjusted Net Loss (60) (2,940) Non-cash recurring Non-cash recurring Non-cash
  18. 18. Slide 18 Balance Sheet & Cash Flow Statement (US$ 000's) June 30, December 31, 2013 2012 Cash and restricted cash (current and non-current) 21,707 27,687 Vessels, net 314,650 298,376 Advances for vessel acquisitions / under construction 27,249 49,593 Other fixed assets, net 446 498 Investment in equity affiliate 19,514 19,988 Loan to affiliate 12,000 14,000 Other assets 15,068 9,834 TOTAL ASSETS 410,634 419,975 Total debt 188,329 195,542 Total other liabilities 8,976 8,912 TOTAL LIABILITIES 197,305 204,454 Total Shareholders'equity 213,329 215,521 TOTAL LIABILITIES & SHAREHOLDERS' EQUITY 410,634 419,975 (US$ 000's) June 30, June 30, 2013 2012 Net cash from operating activities 1,948 7,387 Net cash used in investing activities (41) (21,975) Net cash (used in) / from financing activites (7,887) 7,708 Net decrease in cash and cash equivalents (5,980) (6,880)
  19. 19. Slide 19 Current Operating Fleet Name & Type DWT Year Built Country of Build Panamax Fleet Calm Seas 74,047 1999 Japan Deep Seas 72,891 1999 Korea Kind Seas 72,493 1999 Japan Pearl Seas 74,483 2006 China Diamond Seas 74,274 2001 Japan Coral Seas 74,477 2006 China Golden Seas 74,475 2006 China Dream Seas 75,151 2009 China Supramax Fleet Sapphire Seas 53,702 2005 China Friendly Seas 58,779 2008 China Handysize Fleet Prosperous Seas 37,293 2012 China Precious Seas 37.205 2012 China Priceless Seas 37,202 2013 China TOTAL 816,472
  20. 20. Slide 20 Current Newbuilding Program Hull No. & Type DWT / TEU Country of Build Expected Delivery Drybulk Handysize 625 (Proud Seas) 37,200 China Q4 2013 TOTAL 37,200 Containerships 656 4,800 China Q3 2014 657 4,800 China Q3 2014 TOTAL 9,600
  21. 21. Slide 21 Current Fleet Employment (1) Deep Seas & Coral Seas: We have agreed with the charterer on the early termination of the respective time charter agreements (2) Golden Seas: Charterers have the option to extend the charter agreement for an additional 11 to 13 months at $13,000 plus 50/50 profit share (3) Prosperous Seas & Precious Seas: Charterers have the option to extend the charter agreement for an additional 11 to 14 months at $15,500 per day VESSEL CHARTERER GROSS HIRE DURATION T/C COMMENCED T/C EXPIRES PANAMAX FLEET Calm Seas Intermare Transport GmbH $ 11,800 19-24 Months Mar-12 Oct-13 / Mar-14 Deep Seas Morgan Stanley Capital Group Inc. $ 11,000 plus 50/50 Profit Share 33-36 Months (1) Oct-11 Aug-13 Kind Seas Cargill International S.A. $ 13,650 About 70-90 Days Jun-13 Aug-13 / Sep-13 Pearl Seas Cargill International S.A. $ 12,125 22-25 Months Dec-11 Sep-13 / Jan-14 Diamond Seas Louis Dreyfus Commodities $ 9,050 115-225 Days Jun-13 Oct-13 / Jan-14 Coral Seas Morgan Stanley Capital Group Inc. $ 12,000 23-25 Months (1) Jan-12 Aug-13 $ 12,250 22-25 Months Nov-11 Sep-13 / Dec-13 $ 13,000 plus 50/50 Profit Share 11-13 Months (2) Dream Seas MOL Bulk Carriers Pte. Ltd. $ 17,250 About 50 Days Aug-13 Sep-13 SUPRAMAX FLEET Sapphire Seas PACC Container Lines Pte Ltd. $ 9,000 5-7 Months Jul-13 Dec-13 / Feb-14 Friendly Seas Western Bulk Carriers A/S $ 10,700 18-24 Months Feb-12 Aug-13 / Feb-14 HANDYSIZE FLEET $ 12,125 23-26 Months May-12 Mar-14 / Jul-14 $ 15,500 11-14 Months (3) $ 12,125 23-26 Months Jun-12 May-14 / Sep-14 $ 15,500 11-14 Months (3) Priceless Seas Western Bulk Carriers A/S $ 8,750 About 40 Days Jul-13 Aug-13 PARAGON FLEET EMPLOYMENT Prosperous Seas Precious Seas Cargill International S.A. Cargill International S.A. Golden Seas Mansel Ltd.
  22. 22. Slide 22 Vessel Next DD Estimated Estimated Type Quarter Budget (1) Offhire Days (1) Friendly Seas Supramax Q1 2013 Completed Kind Seas Panamax Q2 2013 Completed Sapphire Seas Supramax Q2 2013 Completed Calm Seas Panamax Q3 2013 $ 750,000 18 Total 2013 $ 750,000 18 Dry-dockings 2013 - 2014 1. The costs reflected are estimates based on drydocking our vessels in China. We estimate that each dry-dock will result in 18 days off-hire. Actual costs may vary on various factors. We expect to fund these costs with cash from operations Deep Seas Panamax Q1 2014 $ 750,000 18 Pearl Seas Panamax Q1 2014 $ 750,000 18 Coral Seas Panamax Q2 2014 $ 750,000 18 Dream Seas Panamax Q2 2014 $ 750,000 18 Golden Seas Panamax Q3 2014 $ 750,000 18 Kind Seas Panamax Q4 2014 $ 750,000 18 Total 2014 $ 4,500,000 108

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