Earnings Conference CallFourth Quarter & Year Ended December 31, 2012
Forward Looking Statements  This presentation contains certain statements that may be deemed to be “forward-looking statem...
Agenda         4Q & Full Year 2012 Financial Highlights         Company Update         Industry Overview         Financial...
Financial Highlights - 4Q & Full Year 2012                                                            Q4 2 0 1 2         Q...
Financing Update   Debt restructuring successfully completed:     Final documentation signed with all our Lenders.     R...
Financing Update             Leverage ratio of 60%             Reduced debt repayment requirements                        ...
Newbuilding Update - M/V Priceless Seas Delivered        Fleet size     increased to 13     drybulk vessels               ...
Chartering Update                   $36.9 million contracted minimum net hire receipts as of Dec. 31, 2012                ...
Drybulk Market             TC rates remain close to breakeven levels in all sectors             Asset values are stabilizi...
Supply Fundamentals                       Drybulk orderbook is contracting – currently stands at 19% of existing fleet    ...
Demand & Supply Equilibrium                            Net Fleet Growth is expected to be higher than required through 201...
Statement of Operations Adjustments                                                     3 M o nths Ended          Y ear En...
Operating Performance – Full Year 2012                                                                Y ear Ended         ...
Investment Summary  Drybulk Market  •   Drybulk demand slowdown through 2013 is expected.  •   Overcapacity remains the bi...
Investor Relations /Media:      Company:              Allen & Caron Inc.   Paragon Shipping Inc.         Rudy Barrio (Inve...
Appendices             Slide 16
Statement of Operations – 4Q 2012                                                                   Adjustments         Ad...
Statement of Operations – Full Year 2012                                                                 Adjustments      ...
Balance Sheet & Cash Flow Statement    (US$ 000s)                                          December 31,    December 31,   ...
Current Operating Fleet Name & Type        DWT      Year Built   Country of Build    Date Acquired Panamax Fleet Calm Seas...
Current Newbuilding Program Hull No. & Type     DWT / TEU   Country of Build   Expected Delivery Drybulk Handysize 625 (Pr...
Current Fleet Employment                                                                             PARAGON FLEET EMPLOYM...
Dry-dockings 2013 - 2014                                                         Vessel                     Next DD       ...
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Paragon Shipping Q4 2012 results presentation

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Paragon Shipping Q4 2012 results presentation

  1. 1. Earnings Conference CallFourth Quarter & Year Ended December 31, 2012
  2. 2. Forward Looking Statements 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 managements 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. Slide 2
  3. 3. Agenda 4Q & Full Year 2012 Financial Highlights Company Update Industry Overview Financial Update Investment Summary Slide 3
  4. 4. Financial Highlights - 4Q & Full Year 2012 Q4 2 0 1 2 Q4 2 0 1 1 F .Y. 2 0 1 2 F .Y. 2 0 1 1 Average No. of Vessels 12.0 10.3 11.2 11.5 Time Charter Equivalent rate $ 10,563 $ 17,905 $ 11,923 $ 21,312 Net Revenue $ 12.9 m $ 16.0 m $ 50.3 m $ 86.9 m EBITDA $ 6.9 m ($ 262.4 m) $ 7.6 m ($ 238.4 m) Adjusted EBITDA $ 4.4 m $ 9.9 m $ 24.2 m $ 57.7 m Net Income / (Loss) $ 0.3 m ($ 272.4 m) ($ 17.6 m) ($ 283.5 m) Adjusted Net (Loss) / Income ($ 2.1 m) $ 0.5 m ($ 1.0 m) $ 15.4 m Earnings / (Loss) P.S. $0.05 ($45.25) ($2.84) ($47.61) Adjusted (Loss) / Earnings P.S. ($0.33) $0.09 ($0.16) $2.58 EBITDA Adjusted (1) Net Income Adjusted (1) 20 18.3 8 6.8 16.5 6 5.2 15 13.1 4 USD Million USD Million 2.9 9.9 10 2 1.1 7.0 0.5 0.5 6.6 6.1 (0.4) 4.4 0 5 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 -2 (2.1) 0 -4 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412(1) Adjusted for non cash items Slide 4
  5. 5. Financing Update Debt restructuring successfully completed:  Final documentation signed with all our Lenders.  Raised $10.0 million in equity through CEO’s private placement.  All conditions precedent fulfilled. Achievements:  We obtained waivers for several of our financial & security coverage ratio covenants.  The relaxation of several of our financial & security coverage ratio covenants.  The deferral of a portion of our scheduled quarterly installments.  The extension of two of our loan facilities: BOI & BOS for 3 & 2 years respectively.  The extension of the availability period of Nordea facility from July 2013 to April 2014.  A gain from debt extinguishment of $1.9 million.  Overall, we reduced our debt repayment requirements for 2013 and 2014 by $44.4 million and $6.9 million, respectively. Slide 5
  6. 6. Financing Update Leverage ratio of 60% Reduced debt repayment requirements Leverage Ratio (1) Scheduled Loan Repayments (USD Million) Cash (including restricted cash) $ 25 m $75 $200 192 188 Total Debt $ 194 m $60 185 $190 181 42.8 Net Debt $ 169 m $45 $180 (2) M.V. Adjusted Net Worth $ 111 m $30 $170 Total Capitalization $ 280 m $15 6.7 4.7 4.7 $160 3.6 3.6 3.6 3.6 Net Debt / Total Capitalization 60% $0 $150 Q113 Q213 Q313 Q413 Debt O/S Loan Repaym. before Restr. Loan Repaym. after Restr.1) As of February 18, 20132) Including newbuilding deposits, KLC Shares, loan to Box Ships and M.V. adjusted investment in Box Ships Slide 6
  7. 7. Newbuilding Update - M/V Priceless Seas Delivered Fleet size increased to 13 drybulk vessels Debt-Free Vessel, Low Breakeven Point Slide 7
  8. 8. Chartering Update $36.9 million contracted minimum net hire receipts as of Dec. 31, 2012 Rem ainder M in. Hire 2014 2015 2016 2013 Receipts Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Kind Seas $0.4 m Diam ond Seas $0.8 m Sapphire Seas $0.9 m Dream Seas $2.7 m On the Water F riendly Seas $2.0 m Pearl Seas $3.1 m C alm Seas $2.9 m Golden Seas $2.9 m C oral Seas $4.0 m Deep Seas $6.0 m Prosperous Seas $5.2 m Precious Seas $5.6 m Priceless Seas $0.4 m Proud Seas - N Bs Hull N o. 6 5 6 - Hull N o. 6 5 7 - F ix ed Days Optional Period Open Days $ 3 6 .9 m F ix ed ( 1) 55% 7% 0% 0% Revenue Days Average charter term remaining (1) = 0.6 years(1) Assumes earliest redelivery dates Slide 8
  9. 9. Drybulk Market TC rates remain close to breakeven levels in all sectors Asset values are stabilizing in all sectors Average T/C Routes (USD Per Day) 5 Year Old Secondhand Prices (USD Million) 40,000 Capesize 60 Panamax Supramax 30,000 Handysize 40 20,000 20 10,000 Capesize Panamax Supramax Handysize Linear (Capesize) Linear (Panamax) Linear (Supramax) Linear (Handysize) 0 0 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13Source: Clarkson’s Research Slide 9
  10. 10. Supply Fundamentals Drybulk orderbook is contracting – currently stands at 19% of existing fleet More than 1,150 vessels added to the fleet in 2012, while about 580 vessels were scrapped Outstanding Orderbook by Vessel Type Global Fleet vs Orderbook 100 92 m 800 100% 80 600 75%Million Dwt 60 400 50% 40 33 m 200 25% 20 6m 0 0% 0 2006 2000 2001 2002 2003 2004 2005 2007 2008 2009 2010 2011 2012 2013 2013 2014 2015+ Capesize Panamax Supramax Handysize Global Fleet Orderbook Orderbook as a % of Global Fleet Deletions vs Newbuilding Deliveries 15 14 12 12Million Dwt 10 10 10 9 10 8 8 7 7 6 5 6 6 5 5 5 4 5 4 4 3 4 3 2 3 2 2 2 3 3 3 3 2 2 2 0 January February March April May June July August September October November DecemberSource: Clarkson’s Research Deliveries Deletion Net Growth Slide 10
  11. 11. Demand & Supply Equilibrium Net Fleet Growth is expected to be higher than required through 2013 inclusive 4,500 18% 16.9% 16.9% 16% 4,000 14.4% 14% Trade in Million Tonnes 12% 3,500 10.5% 10% 8.9% 8% 3,000 6% 5.4% 5.5% 4.8% 4% 2,500 2.2% 2.5% 2% 2,000 0% 2005 2006 2007 2008 2009 2010 2011 2012e 2013f 2014f Net fleet growth Required dwt growth TradeSource: Clarkson’s Research Slide 11
  12. 12. Statement of Operations Adjustments 3 M o nths Ended Y ear Ended Dec. 3 1 , 2 0 1 2 Dec. 3 1 , 2 0 1 2Adjusted N et Loss Reconciliation(USD thousands except for per share data)N et Inco m e / (Lo ss) 329 (1 7 ,5 5 7 )Loss on investment in affiliates - 16,985 Non-cashGain from debt extinguishment (1,893) (1,893) Non-cashLoss on marketable securities - 980 Non-cashUnrealized gain from interest rate swaps (692) (2,017) Non-cash recurringShare based compensation 136 2,537 Non-cash recurringAdjusted N et Lo ss (2 ,1 2 0 ) (9 6 5 )Adjusted EBITDA ReconciliationAdjusted N et Loss (2 ,1 2 0 ) (9 6 5 )Plus Net interest expense, including swap interest 2,454 8,748Plus Depreciation 4,075 16,386Adjusted EBITDA 4 ,4 0 8 2 4 ,1 6 9 Slide 12
  13. 13. Operating Performance – Full Year 2012 Y ear Ended Dec. 3 1 , 2 0 1 2 F leet Data Average num ber of vessels 1 1 .2 C alendar days for fleet 4 ,0 9 9 Available days for fleet 4 ,0 9 9 Operating days for fleet 4 ,0 6 3 F leet utiliz ation 9 9 .1 % Daily Results Actual Am ounts Tim e C harter Equivalent 1 1 ,9 2 3 4 8 ,4 4 4 ,7 1 5 Vessel operating ex penses (4 ,5 8 8 ) (1 8 ,8 0 8 ,0 8 4 ) M anagem ent fees (9 9 9 ) (4 ,0 9 4 ,7 4 4 ) G&A ex penses (ex . non-cash item s) (1 ,3 0 9 ) (5 ,3 6 5 ,0 6 0 ) Total Vessel Operating Ex penses (TVOE) (6 ,8 9 6 ) (2 8 ,2 6 7 ,8 8 8 ) F ree C ash F low from Operations 5 ,0 2 7 2 0 ,1 7 6 ,8 2 7 N et interest ex pense, including sw ap interest (2 ,1 3 4 ) (8 ,7 4 7 ,7 8 5 ) ( 1) Loan repaym ents (4 ,8 8 4 ) (2 0 ,0 1 8 ,4 3 7 ) Dividends received from affiliates 906 3 ,7 1 2 ,5 0 0 F ree C ash F low (1 ,0 8 5 ) (4 ,8 7 6 ,8 9 5 )(1) Excluding loan prepayments Slide 13
  14. 14. Investment Summary Drybulk Market • Drybulk demand slowdown through 2013 is expected. • Overcapacity remains the biggest concern. • A gradual recovery in the drybulk market is expected starting in 2014. Paragon Shipping Inc. • Financing & Debt Exposure: Debt restructuring completed. $1.9 million gained from debt extinguishment. Debt repayment requirements reduced by $44.4 million and $6.9 million for 2013 & 2014, respectively. Leverage ratio of 60%. • Fleet Growth: 3 Handysize newbuildings delivered. • Diversification: Exposure to Containership Sector through ownership of 16.4% of Box Ships. • Limited Downside: 55% & 7% of revenue days covered for the remainder of 2013 & full year 2014, respectively. Contracted net revenues of approximately $36.9 million. Slide 14
  15. 15. Investor Relations /Media: Company: Allen & Caron Inc. Paragon Shipping Inc. Rudy Barrio (Investors) Robert Perri, CFA Tel: (212) 691-8087 Chief Financial OfficerEmail: r.barrio@allencaron.com 15 Karamanli Ave. Len Hall (Media) GR 166 73, Voula, Greece Tel: (949) 474-4300 Tel: +30 (210) 8914 600 Email: len@allencaron.com Email: ir@paragonshipping.gr
  16. 16. Appendices Slide 16
  17. 17. Statement of Operations – 4Q 2012 Adjustments Adjusted000s 3 Months Ended 3 Months Ended 3 Months Ended Dec. 31, 2012 Dec. 31, 2012 Dec. 31, 2012Revenue Time charter revenue $13,682 $13,682 Commisssions (738) (738) Net Revenue 12,945 12,945Expenses / (Income) Voyage expenses 1,505 1,505 Vessel operating expenses 4,778 4,778 Management fees - related party 1,105 1,105 Depreciation 4,075 4,075 General & administrative expenses 1,608 136 1,472 Non-cash recurring Bad debt provisions 125 125 Other income (47) (47) Total Operating Expenses 13,149 136 13,013 Operating (Loss) / Income (204) 136 (68)Other Income / (Expense) Interest and finance costs (1,946) (1,946) Gain on derivatives, net 13 (692) (679) Non-cash recurring Interest income 171 171 Equity in net income of affiliate 398 398 Gain from debt extinguishment 1,893 (1,893) - Non-cash Foreign currency gain 4 4 Total Other Expenses, net 533 (2,585) (2,052) Net Income / (Loss) $329 ($2,449) ($2,120) Weighted average number of shares 6,354 6,354 6,354 Earnings / (Loss) per Common Share $0.05 ($0.38) ($0.33) Slide 17
  18. 18. Statement of Operations – Full Year 2012 Adjustments Adjusted000s Year Ended Year Ended Year Ended Dec. 31, 2012 Dec. 31, 2012 Dec. 31, 2012Revenue Time charter revenue $53,219 $53,219 Commisssions (2,918) (2,918) Net Revenue 50,301 50,301Expenses / (Income) Voyage expenses 1,856 1,856 Vessel operating expenses 18,808 18,808 Management fees - related party 4,095 4,095 Depreciation 16,386 16,386 General & administrative expenses 7,902 2,537 5,365 Non-cash recurring Bad debt provisions 125 125 Gain from marketable securities (414) 980 (1,395) Non-cash Other income (751) (751) Total Operating Expenses 48,007 3,517 44,490 Operating Income 2,294 3,517 5,811Other Income / (Expense) Interest and finance costs (6,745) (6,745) Loss on derivatives, net (714) (2,017) (2,731) Non-cash recurring Interest income 729 729 Equity in net income of affiliate 1,987 1,987 Gain from debt extinguishment 1,893 (1,893) - Non-cash Loss on investment in affiliate (16,985) 16,985 - Non-cash Foreign currency loss (15) (15) Total Other Expenses, net (19,851) 13,075 (6,777) Net (Loss) / Income ($17,557) $16,592 ($965) Weighted average number of shares 6,036 6,036 6,036 (Loss) / Earnings per Common Share ($2.84) $2.68 ($0.16) Slide 18
  19. 19. Balance Sheet & Cash Flow Statement (US$ 000s) December 31, December 31, 2012 2011 Cash and restricted cash (current and non-current) 27,687 39,564 Other current assets 21,231 4,029 Fixed assets, net 348,467 332,569 Other long term assets 22,697 55,912 TOTAL ASSETS 420,082 432,074 Bank debt 195,542 201,285 Other liabilities 8,912 9,565 TOTAL LIABILITIES 204,454 210,850 Shareholdersequity 215,628 221,224 TOTAL LIABILITIES & SHAREHOLDERS EQUITY 420,082 432,074 (US$ 000s) December 31, December 31, 2012 2011 Net cash from operating activities 13,377 45,467 Net cash (used in) / from investing activities (15,702) 43,674 Net cash from / (used in) financing activites 5,439 (109,366) Net increase / (decrease) in cash 3,113 (20,224) Slide 19
  20. 20. Current Operating Fleet Name & Type DWT Year Built Country of Build Date Acquired Panamax Fleet Calm Seas 74,047 1999 Japan December 2006 Deep Seas 72,891 1999 Korea December 2006 Kind Seas 72,493 1999 Japan December 2006 Pearl Seas 74,483 2006 China August 2007 Diamond Seas 74,274 2001 Japan September 2007 Coral Seas 74,477 2006 China November 2007 Golden Seas 74,475 2006 China December 2007 Dream Seas 75,151 2009 China July 2010 Supramax Fleet Sapphire Seas 53,702 2005 China August 2007 Friendly Seas 58,779 2008 China August 2008 Handysize Fleet Prosperous Seas 37,293 2012 China May 2012 Precious Seas 37.205 2012 China June 2012 Priceless Seas 37,202 2013 China January 2013 TOTAL 816,472 Slide 20
  21. 21. 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 Q2 2014 657 4,800 China Q2 2014 TOTAL 9,600 Slide 21
  22. 22. Current Fleet Employment PARAGON FLEET EMPLOYMENT VESSEL CHARTERER GROSS HIRE DURATION T/C COMMENCED T/C EXPIRES PANAMAX FLEET Calm Seas Intermare Transport $ 11,800 19-24 Months Mar-12 Oct-13 / Mar-14 $ 11,000 plus 50/50 Profit Share 33-36 Months Oct-11 Jul-14 / Oct-14 Deep Seas Morgan Stanley ( 1) $ 14,000 11-13 Months Kind Seas Torm A/S $ 8,500 About 90 Days Dec-12 Mar-13 Pearl Seas Cargill International $ 12,125 22-25 Months Dec-11 Sep-13 / Jan-14 Diamond Seas Cargill International $ 14,750 About 60 Days Dec-12 Feb-13 $ 12,000 23-25 Months Jan-12 Dec-13 / Mar-14 Coral Seas Morgan Stanley ( 2) $ 14,500 11-13 Months $ 12,250 22-25 Months Nov-11 Sep-13 / Dec-13 Golden Seas Mansel (Vitol S.A.) ( 3) $ 13,000 plus 50/50 Profit Share 11-13 Months Dream Seas Intermare Transport $ 20,000 35-37 Months Jul-10 May-13 / Aug-13 SUPRAMAX FLEET Sapphire Seas Grieg Star Bulk $ 13,900 About 60 Days Jan-13 Mar-13 Friendly Seas Western Bulk Carriers $ 10,700 18-24 Months Feb-12 Aug-13 / Feb-14 HANDYSIZE FLEET $ 12,125 23-26 Months May-12 Mar-14 / Jul-14 Prosperous Seas Cargill International ( 4) $ 15,500 11-14 Months $ 12,125 23-26 Months Jun-12 May-14 / Sep-14 Precious Seas Cargill International ( 4) $ 15,500 11-14 Months Priceless Seas STX Pan Ocean $ 6,000 About 30 Days Mar-13 Apr-13(1) Deep Seas: Charterers have the option to extend the charter agreement for an additional 11 to 13 months at $14,000 per day(2) Coral Seas: Charterers have the option to extend the charter agreement for an additional 11 to 13 months at $14,500 per day(3) 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(4) Prosperous Seas & Precious Seas: Charterers have the option to extend the charter agreement for an additional 11 to 14 month s at $15,500 per day Slide 22
  23. 23. Dry-dockings 2013 - 2014 Vessel Next DD Estimated Estimated (1) (1) Type Quarter Budget Offhire Days Kind Seas Panamax Q1 2013 $ 750,000 18 Friendly Seas Supramax Q1 2013 $ 650,000 18 Sapphire Seas Supramax Q2 2013 $ 650,000 18 Diamond Seas Panamax Q3 2013 $ 750,000 18 Calm Seas Panamax Q3 2013 $ 750,000 18 Total 2013 $ 3,550,000 90 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 1081. The costs reflected are estimates based on drydocking our vessels in China. We estimate that each drydock will result in 18 days off-hire. Actual costs may vary on various factors. We expect to fund these costs with cash from operations Slide 23

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