Download - Paragon Q1 2013 results presentation
Earnings Conference Call First Quarter 2013
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
Slide 3
Agenda
1Q 2013 Highlights
Company Update
Industry Overview
Financial Update
Investment Summary
Slide 4
Highlights - 1Q 2013
Financial Performance:
• Net Revenues: $13.5 m
• Adjusted EBITDA: $3.2 m
• Adjusted Net Loss: ($2.9 m) or ($0.26) per share
Delivery of our 3rd Handysize Newbuilding – M/V Priceless Seas
Successfully Completed Debt Restructuring
Transition to NASDAQ
Slide 5
1) Subject to certain conditions precedent
2) As of April 25, 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 $ 192 m
Net Debt $ 167 m
M.V. Adjusted Net Worth (3)
$ 99 m
Total Capitalization $ 266 m
Net Debt / Total Capitalization 63%
Leverage ratio of 63%
Debt restructuring completed - Reduced debt repayment requirements
$25 million remaining under Nordea Facility to finance our last Handysize
Newbuilding (1)
Scheduled Loan Repayments (USD Million)
191.9 188.3
184.7
181.1
3.6
0.4
3.2 3.6 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
Slide 6
Chartering Update
Min. Hire
Receipts
F ixed Days Optional Period Open Days $26.1 m
$4.1 m
$4.6 m
$1.9 m
$3.0 m
$1.3 m
$2.1 m
$1.9 m
$5.0 m
Q1 Q4 Q3
0%7%
Q3
Dream Seas
Pearl Seas
Coral Seas
Deep Seas
Q2
Precious Seas
Kind Seas
Prosperous Seas
2015
Q4
Remainder
2013
Q3 Q1
2014
Q1 Q2 Q2Q4
2016
Q1 Q2 Q3 Q4
$1.0 m
$0.4 m
$0.2 m
Fixed
Revenue Days ( 1) 49%
Hull No. 657 -
-
-
Proud Seas
Hull No. 656
0%
NB
s
Priceless Seas $0.4 m
Diamond Seas $0.2 m
On
th
e W
ate
r
Sapphire Seas
Golden Seas
Calm Seas
Friendly Seas
Average charter term remaining (1) = 0.4 years
(1) Assumes earliest redelivery dates
$26.1 million contracted backlog as of Mar. 31, 2013
Slide 7
0
10
20
30
40
Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-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
Capesize
Panamax
Supramax
Handysize
Drybulk Market
Average T/C Routes (USD Per Day)
Source: Clarkson’s Research
TC rates remain close to breakeven levels in all sectors
Asset values are stabilizing in all sectors
5 Year Old Secondhand Prices (USD Million)
Slide 8
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%
Millio
n T
on
ne
s
-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
Slide 9
0
20
40
60
80
Remainder 2013 2014 2015+
Capesize Panamax Supramax Handysize
0%
25%
50%
75%
100%
0
200
400
600
800
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
Global Fleet Orderbook Orderbook as a % of Global Fleet
Supply Fundamentals
Source: Clarkson’s Research
Millio
n D
wt
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%)
Q113: 18 million dwt delivered vs 7 million dwt scrapped (or 39%)
Millio
n D
wt
Deletions vs Newbuilding Deliveries
74 m
37 m
16 m
99
34
65
0
50
100
150
Full Year 2012
Deliveries Deletion Net Growth
10
4 4 3 2 2
7
2 2
0
5
10
15
Jan-13 Feb-13 Mar-13
Deliveries Deletion Net Growth
Slide 10
2,000
2,500
3,000
3,500
4,000
4,500
2005 2006 2007 2008 2009 2010 2011 2012e 2013f 2014f
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Net fleet growth Required dwt growth Trade
Demand & Supply Equilibrium
Net Fleet Growth is expected to be higher than required through 2013 inclusive
Source: Clarkson’s Research
14.4%
10.2%
2.9%
8.6%
4.9%
16.9% 16.9%
4.8%
1.5%
5.7%
Tra
de
in
Millio
n T
on
ne
s
Slide 11
Financial Performance – 1Q 2013
(1) Excluding loan prepayments
Q1 2013 Q1 2012
Average No. of Vessels 12.7 10.0
Time Charter Equivalent rate $ 11,388 $ 14,030
Fleet Utilization 99.8% 99.8%
Net Revenue $ 13.5 m $ 12.5 m
EBITDA $ 2.6 m $ 6.6 m
Adjusted EBITDA $ 3.2 m $ 7.0 m
Net (Loss) / Income ($ 3.5 m) $ 0.7 m
Adjusted Net (Loss) / Income ($ 2.9 m) $ 1.1 m
(Loss) / Earnings P.S. ($0.32) $0.12
Adjusted (Loss) / Earnings P.S. ($0.26) $0.19
Slide 12
Investment Summary
Drybulk Market
• 2013 remains challenging, but a recovery is in sight.
• Increased scrapping and reduced orderbook.
• A gradual recovery in the drybulk market is expected.
Paragon Shipping Inc.
• Financing & Debt Exposure: Debt restructuring completed. Reduced Debt repayment
requirements and obtained waivers. Current leverage ratio of 63%.
• 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.
Investor Relations /Media:
Allen & Caron Inc.
Rudy Barrio (Investors)
Tel: (212) 691-8087
Email: [email protected]
Len Hall (Media)
Tel: (949) 474-4300
Email: [email protected]
Company:
Paragon Shipping Inc.
Robert Perri, CFA
Chief Financial Officer
15 Karamanli Ave.
GR 166 73, Voula, Greece
Tel: +30 (210) 8914 600
Email: [email protected]
Slide 14
Appendices
Slide 15
Adjustments Adjusted
000's 3 Months Ended 3 Months Ended 3 Months Ended
Mar. 31, 2013 Mar. 31, 2013 Mar. 31, 2013
Revenue
Time charter revenue $14,225 $14,225
Commisssions (772) (772)
Net Revenue 13,453 13,453
Expenses / (Income)
Voyage expenses, net 665 665
Vessel operating expenses 5,081 5,081
Dry-docking expenses 471 471
Management fees - related party 1,496 336 1,160
Depreciation 4,134 4,134
General & administrative expenses 3,611 142 3,469
Bad debt provisions 17 17
Total Operating Expenses 15,475 478 14,997
Operating Loss (2,021) 478 (1,544)
Other Income / (Expense)
Interest and finance costs (1,902) (1,902)
Loss on derivatives, net (15) (238) (253)
Interest income 226 226
Equity in net income of affiliate 569 569
Loss on investment in affiliate (391) 391 -
Foreign currency gain 23 23
Total Other Expenses, net (1,490) 153 (1,337)
($3,511) $631 ($2,880)
10,992 10,992 10,992
($0.32) $0.06 ($0.26)
Net Loss
Weighted average number of shares
Loss per Common Share
Non-cash recurring
Statement of Operations – 1Q 2013
Non-cash recurring
Non-cash
Non-cash
Slide 16
Adjusted EBITDA Reconcil iation
Adjusted Net Loss (2,880)
Plus Net interest expense, including swap interest 1,928
Plus Depreciation 4,134
Adjusted EBITDA 3,182
Statement of Operations Adjustments
3 Months Ended
Mar. 31, 2013
Adjusted Net Loss Reconcil iation
(USD thousands except for per share data)
Net Loss (3,511)
Loss on investment in affiliates 391
Unrealized gain from interest rate swaps (238)
Share based compensation 478
Adjusted Net Loss (2,880)
Non-cash recurring
Non-cash recurring
Non-cash
Slide 17
Balance Sheet & Cash Flow Statement
(US$ 000's) March 31, December 31,
2013 2012
Cash and restricted cash (current and non-current) 23,607 27,687
Other current assets 11,459 11,231
Fixed assets, net 346,185 348,467
Other long term assets 30,972 32,590
TOTAL ASSETS 412,223 419,975
Bank debt 191,935 195,542
Other liabilities 7,606 8,912
TOTAL LIABILITIES 199,541 204,454
Shareholders'equity 212,682 215,521
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY 412,223 419,975
(US$ 000's) March 31, March 31,
2013 2012
Net cash from operating activities 261 3,891
Net cash used in investing activities (620) (429)
Net cash used in financing activites (3,722) (5,386)
Net decrease in cash and cash equivalents (4,080) (1,924)
Slide 18
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 19
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 20
Current Fleet Employment
(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 months at $15,500 per day
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
$ 14,000 11-13 Months ( 1)
Kind Seas Torm A/S $ 8,500 About 90 Days Dec-12 Apr-13
Pearl Seas Cargill International $ 12,125 22-25 Months Dec-11 Sep-13 / Jan-14
Diamond Seas DS Norden A/S $ 8,750 About 50 Days Feb-13 Apr-13
$ 12,000 23-25 Months Jan-12 Dec-13 / Mar-14
$ 14,500 11-13 Months ( 2)
$ 12,250 22-25 Months Nov-11 Sep-13 / Dec-13
$ 13,000 plus 50/50 Profit Share 11-13 Months ( 3)
Dream Seas Intermare Transport $ 20,000 35-37 Months Jul-10 May-13 / Aug-13
SUPRAMAX FLEET
Sapphire Seas Nordic Bulk Carriers A/S $ 11,100 About 25 Days Apr-13 May-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
$ 15,500 11-14 Months ( 4)
$ 12,125 23-26 Months Jun-12 May-14 / Sep-14
$ 15,500 11-14 Months ( 4)
Priceless Seas Trafigura Spot Charter About 50 Days Apr-13 May-13
Coral Seas
PARAGON FLEET EMPLOYMENT
Deep Seas Morgan Stanley
Morgan Stanley
Prosperous Seas
Precious Seas
Cargill International
Cargill International
Golden Seas Mansel (Vitol S.A.)
Slide 21
Vessel Next DD Estimated Estimated
Type Quarter Budget (1)
Offhire Days (1)
Friendly Seas Supramax Q1 2013 Completed
Kind Seas Panamax Q2 2013 $ 750,000 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 $ 2,900,000 72
Dry-dockings 2013 - 2014
1. 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
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