Earnings Conference Call Third Quarter & 9 Months Ended September 30, 2014

Transcription

1 Earnings Conference Call Third Quarter & 9 Months Ended September 30, 2014

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 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. Slide 2

3 Agenda 3Q 2014 & YTD Highlights Company Update Drybulk Industry Overview Financial Update Investment Summary Slide 3

4 Highlights - 3Q 2014 & YTD Financial Performance: Net Revenue, net of voyage expenses: $8.4 m. Adjusted EBITDA: $ 0.7 m. Adjusted Net Loss: $ 6.1 m. or $0.25 per share Completed an offering of $25.0 million of senior unsecured notes due The net proceeds from the offering amounted to approximately $23.9 million. Proceeded with debt prepayments following the refinancing of the loan agreement with HSH Nordbank AG, and with respect to the loan agreements with Unicredit Bank AG and Bank of Ireland in return for a streamlined repayment profile and the removal of certain restrictive financial covenants. Subsequent events: Took delivery of the first two Eco-Design Ultramax drybulk carriers, the M/V Gentle Seas and the M/V Peaceful Seas. The final installment for the two vessels was mainly financed from the loan facility with HSH Nordbank AG. The Company s equity contribution was limited to $1.3 million in the aggregate. Slide 4

5 Delivery of M/V Gentle Seas & M/V Peaceful Seas Approximately 63,350 dwt each 15% increase to dwt fleet size Reduction in fleet age to 7.1 from 8.1 years Expected Fuel Consumption < 10% & Cargo Capacity >20% Visual Graph Source: Oshima Shipbuilding, Morgan Stanley Research Slide 5

6 Asset Values & Fleet Growth Average age of Paragon s current fleet 7.1 years vs. 9.0 years for the industry Reduction in fleet age from 7.1 to 6.4 years on a fully-deployed basis 21 vessels totaling 1.35 million Dwt on a fully-deployed basis Market Value of Fleet on a fully deployed basis: $460 million Net Asset Value Calculation (1) Total P. Share Cash (including restricted cash) $ 32 m $1.30 Market Value of Operating Fleet (TC Free) $ 300 m $12.18 Market Value of Newbuilding Contacts $ 60 m $2.41 Market Value of Box Ships & KLC Shares $ 5 m $0.22 Other Assets, net of Other Liabilities $ 8 m $0.35 Total Outstanding Debt ($ 235) m ($9.55) Net Asset Value (NAV) - Charter Free $ 170 m $ Vsls 8.7 Yrs Fleet Growth Since Inception 10 Vsls 7.8 Yrs 16 Vsls 7.1 Yrs Today H H 2015 Total Outstanding CapEx $80.3 m. $21.4 m. $101.7 m. Contracted Credit Facilities (2) $78.0 m. - $78.0 m. Expected Credit Facilities (2) - $20.0 m. $20.0 m. Expected Equity CapEx $2.3 m. $1.4 m. $3.7 m. (1) As of October 31, 2014 (2) Contracted credit facilities are facilities we have already signed agreements for, expected facilities are based on our financing expectation and assumes approximately 60% leverage. 21 Vsls 6.4 Yrs Slide 6

7 NBs On the Water Chartering Update Spot exposure significant upside potential Name Coral Seas Dream Seas Prosperous Seas Precious Seas Calm Seas Sapphire Seas Kind Seas Priceless Seas F riendly Seas Golden Seas Proud Seas Gentle Seas Deep Seas Peaceful Seas Pearl Seas Diam ond Seas Hull No. DY4050 Hull No. DY4052 Hull No. YZJ1144 Hull No. YZJ1145 Hull No. YZJ1142 Type Ultram ax Ultram ax Kamsarmax Kamsarmax Kamsarmax Fixed Revenue Days ( 1) Panam ax Panam ax Handysiz e Handysiz e Panam ax Supram ax Panam ax Handysiz e Supram ax Panam ax Handysiz e Ultram ax Panam ax Ultram ax Panam ax Panam ax Rem ainder Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 253 open days 6,709 open days 7,686 open days Minimum Fixed Days Open Days Optional Period (1) Assumes earliest redelivery dates Slide 7

8 Financing Update Reduced quarterly installments through 2015 to an average of $5.1 million from an average of $6.6 million Reduced fleet s 2015 cash flow daily breakeven by 7.4% Increased average life of loan portfolio by approximately one year Covenant light facilities increased financial flexibility and removed earnings related covenants Leverage Ratio (1) Repayment Profile Comparison (USD Million) (3) Cash (including restricted cash) Total Outstanding Debt $ 32 m $ 235 m Net Outstanding Debt M.V. Adjusted Net Worth (2) $ 203 m $ 156 m Total Capitalization (M.V. Adjusted (2) ) $ 359 m Net Debt / Total Capitalization 57% 0 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Previous debt repayments Current debt repayments (1) As of October 31, 2014 (2) Including newbuilding deposits, KLC Shares and M.V. adjusted investment in Box Ships (3) Excludes debt proceeds and repayment installments relating to the newbuildings Slide 8

9 Drybulk Seaborne Demand Growth Seaborne demand remains robust Market growing by more than 4.5% CAGR in volumes through 2016 CAGR Iron Ore Coal Agriculture related Construction related % 7.5% 2.1% 7.1% 3.4% 6.3% (f) 7.2% 3.4% 4.5% 2.3% 2.7% 4.5% Other TOTAL Source: Clarkson s Research Slide 9

10 Million Dwt Million Dwt Supply Fundamentals Orderbook currently stands at 23.7% of existing fleet Deletions remain significant 2014YTD: 38 m. dwt delivered vs 12 m. dwt scrapped (or 32%) Drybulk fleet growth is slowing Outstanding Orderbook by Vessel Type Global Fleet vs Orderbook m 66 m % 75% m 15 m % 25% 0 Remainder Capesize Panamax Supramax Handysize Deletions vs Newbuilding Deliveries 0 0% Global Fleet Orderbook Orderbook as a % of Global Fleet YTD 26 Deliveries Deletions Net Growth Source: Clarkson s Research Slide 10

11 Drybulk Market TC Rates: Remained weak throughout Q314 - Steadily improving since late October Asset Values: Declined notably following the intense volatility of the TC market Average T/C Routes (USD Per Day) 5 Year Old Secondhand Prices (USD Mil.) 50,000 40,000 30,000 20,000 Capesize Panamax Supramax Handysize ,000 0 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct Capesize Panamax Supramax Handysize Linear (Capesize) Linear (Panamax) 0 Linear (Supramax) Linear (Handysize) Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Source: Clarkson s Research Slide 11

12 Operating Performance 9M14 vs 9M13-8.5% YOY increase in average number of vessels 9M14 vs 9M13-9.2% YOY decrease in daily TVOE 3Q Q M M 2014 Fleet Data Average number of vessels Calendar days for fleet 1,196 1,288 3,521 3,816 Available days for fleet 1,196 1,288 3,456 3,755 Operating days for fleet 1,184 1,276 3,442 3,712 Fleet utilization 99.0% 99.1% 99.6% 98.9% Daily Results Time Charter Equivalent 9,274 6,570 10,360 7,645 Vessel operating expenses 4,313 4,385 4,474 4,286 Dry-dock ing ex penses Management fees 1,023 1,034 1,014 1,050 G&A expenses (ex. non-cash items) 1,174 1,052 1,787 1,129 Total Vessel Operating Expenses (TVOE) 6,510 6,471 7,757 7,040 Slide 12

13 Financial Performance Net revenue, net of voyage expenses: $8.4 million in 3Q 2014 Adjusted EBITDA: $0.7 million in 3Q 2014 F inancial Performance 3Q Q M M 2014 Net Revenue, net of voyage expenses $ 11.0 m $ 8.4 m $ 35.7 m $ 28.4 m EBITDA ($ 1.4 m) $ 0.7 m $ 7.3 m ($ 20.5 m) Adjusted EBITDA $ 5.7 m $ 0.7 m $ 15.0 m $ 1.9 m Net Loss ($ 7.5 m) ($ 6.0 m) ($ 11.0 m) ($ 41.6 m) Adjusted Net Loss ($ 0.4 m) ($ 6.1 m) ($ 3.3 m) ($ 17.7 m) Loss Per Share ($0.65) ($0.25) ($0.97) ($1.78) Adjusted Loss Per Share ($0.04) ($0.25) ($0.30) ($0.76) Non - Cash Items (USD 000's) Impairment loss $15,695 Gain from sale of assets ($403) Loss / (gain) from marketable securities, net $952 - $952 ($12) Loss on Investment in Affiliate $5,378 - $5,769 $5,855 Unrealized gain on Swaps ($151) ($319) ($660) ($388) Share Based Compensation $910 $248 $1,582 $1,607 Write off of financing expenses $1,511 Total $7,089 ($71) $7,643 $23,865 Slide 13

14 Investment Summary Drybulk Market Strong demand for Iron Ore, Coal and Grains will continue to drive the market recovery Manageable orderbook and the scrapping of older vessels will keep supply in check Charter market remains volatile, but a continuing improvement is expected Paragon s Strengths Built-In Fleet Growth: 2 Ultramax delivered, 5 newbuildings expected in $460 million M.V. of fleet on a fully deployed basis. Current charter free NAV of $6.90 p.s. Financing: Secured loans for 4 of our 5 newbuildings minimum equity CapEx funded with available cash on hand. Covenant light facilities improve financial flexibility Leverage: Efficient capital structure. Current leverage ratio of 57%. Chartering: Spot exposure = significant upside potential. Well positioned to capture the anticipated recovery of the drybulk market with significant lower cost structure and efficient operations Slide 14

15 Investor Relations /Media: Allen & Caron Inc. Rudy Barrio (Investors) Tel: (212) Len Hall (Media) Tel: (949) Company: Paragon Shipping Inc. Robert Perri, CFA Chief Financial Officer 15 Karamanli Ave. GR , Voula, Greece Tel: +30 (210)

16 Appendices Slide 16

17 Dry-dockings Vessel Type Next DD Quarter Budget (1) Offhire Days (1) Deep Seas Panamax Q $ 715, Completed Calm Seas Panamax Q $ 765, Completed Dream Seas Panamax Q $ 715, Completed Total 2014 $ 2,195, Kind Seas Panamax Q $ 750, Sapphire Seas Supramax Q $ 650, Total 2015 $ 1,400, Pearl Seas Panamax Q $ 750, Coral Seas Panamax Q $ 750, Diamond Seas Panamax Q $ 750, Golden Seas Panamax Q $ 750, Total 2016 $ 3,000, 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 Slide 17

18 Statement of Operations 3Q13 vs 3Q14 (US$ 000's) 3 Months Ended 3 Months Ended Sep. 30, 2013 Sep. 30, 2014 Revenue Charter revenue $14,112 $12,803 Commisssions (758) (758) Net Revenue 13,354 12,045 Expenses / (Income) Voyage expenses, net 2,373 3,662 Vessel operating expenses 5,159 5,647 Management fees - related party 1,937 1,332 Depreciation 4,298 4,534 General & administrative expenses 1,601 1,604 Bad debt provisions 69 (15) Gain from vessel early redelivery (2,268) - Loss from marketable securities, net Other expenses Total Operating Expenses 14,121 17,014 Operating Loss (767) (4,969) Other Income / (Expenses) Interest and finance costs (1,657) (2,001) (Loss) / gain on derivatives, net (75) 68 Interest income Equity in net income of affiliate Loss on investment in affiliate (5,378) - Foreign currency (loss) / gain (66) 47 Total Other Expenses, net (6,732) (1,068) Net Loss ($7,499) ($6,037) Weighted av. number of shares, basic & diluted 11,307,194 24,253,142 Loss per Common Share, basic & diluted ($0.65) ($0.25) Slide 18

19 Statement of Operations 9M13 vs 9M14 (US$ 000's) 9 Months Ended 9 Months Ended Sep. 30, 2013 Sep. 30, 2014 Revenue Charter revenue $43,021 $41,706 Commisssions (2,336) (2,408) Net Revenue 40,685 39,298 Expenses / (Income) Voyage expenses, net 5,026 10,921 Vessel operating expenses 15,754 16,357 Dry-docking expenses 1,698 2,193 Management fees - related party 4,620 4,886 Depreciation 12,683 13,446 General & administrative expenses 6,823 5,037 Impairment loss - 15,695 Bad debt provisions 69 - Gain from sale of assets - (403) Gain from vessel early redelivery (2,268) - Gain from marketable securities, net (2,161) (12) Other expenses Total Operating Expenses 42,244 68,331 Operating Loss (1,559) (29,033) Other Income / (Expenses) Interest and finance costs (5,418) (7,023) Loss on derivatives, net (54) (268) Interest income Equity in net income of affiliate 1, Loss on investment in affiliate (5,769) (5,855) Foreign currency (loss) / gain (8) 33 Total Other Expenses, net (9,433) (12,541) Net Loss ($10,992) ($41,574) Weighted av. number of shares, basic & diluted 11,114,617 23,023,546 Loss per Common Share, basic & diluted ($0.97) ($1.78) Slide 19

20 Balance Sheet & Cash Flow Statement (US$ 000's) December 31, September 30, Cash and restricted cash (current and non-current) 41,312 31,101 Vessels, net 306, ,746 Advances for vessel under construction 45,209 67,965 Other fixed assets, net Investment in affiliate 11,309 6,026 Other assets 14,984 18,870 TOTAL ASSETS 419, ,229 Total debt 180, ,039 Total other liabilities 6,780 9,744 TOTAL LIABILITIES 186, ,783 Total shareholders'equity 232, ,446 TOTAL LIABILITIES & SHAREHOLDERS' EQUITY 419, ,229 9 Months Ended 9 Months Ended Sep. 30, 2013 Sep. 30, 2014 Cash and cash equivalent at the beginning of the period 17,677 31,302 Net cash from / (used in) operating activities 2,132 (3,729) Net cash from / (used in) investing activities 5,377 (65,598) Net cash from financing activites 19,050 57,014 Net increase / (decrease) in cash and cash equivalents 26,559 (12,313) Cash and cash equivalent at the end of the period 44,236 18,989 Slide 20

21 Statement of Operations Adjustments Adjusted Net Loss Reconciliation 3 Months Ended 3 Months Ended 9 Months Ended 9 Months Ended Sep. 30, 2013 Sep. 30, 2014 Sep. 30, 2013 Sep. 30, 2014 (US$ 000's) Net Loss (7,499) (6,037) (10,992) (41,574) Impairment loss ,695 Gain from sale of assets (403) Loss / (gain) from marketable securities, net (12) Loss on investment in affiliate 5,378-5,769 5,855 Unrealized gain on interest rate swaps (151) (319) (660) (388) Share based compensation ,582 1,607 Write off of financing expenses ,511 Adjusted Net Loss (410) (6,108) (3,349) (17,709) Adjusted EBITDA Reconciliation Adjusted Net Loss (410) (6,108) (3,349) (17,709) Plus Net interest expense, net of write off of financing expenses, including interest expense from swaps 1,770 2,247 5,626 6,151 Plus Depreciation 4,298 4,534 12,683 13,446 Adju s t ed E BITDA 5, ,960 1,888 Slide 21

22 Operating Fleet & Newbuilding Program Name & Type DWT Year Built Panamax Fleet Operating Fleet Country of Build Calm Seas 74, Japan Deep Seas 72, Korea Kind Seas 72, Japan Pearl Seas 74, China Diamond Seas 74, Japan Coral Seas 74, China Golden Seas 74, China Dream Seas 75, China Newbuilding Program Hull No. & Type DWT Country of Build Ultramax Fleet Expected Delivery DY ,500 China Q DY ,500 China Q Kamsarmax Fleet YZJ ,800 China Q YZJ ,800 China Q YZJ ,800 China Q TOTAL 372,400 Ultramax Fleet Gentle Seas 63, China Peaceful Seas 63, China Supramax Fleet Sapphire Seas 53, China Friendly Seas 58, China Handysize Fleet Prosperous Seas 37, China Precious Seas China Priceless Seas 37, China Proud Seas 37, China TOTAL 980,380 Slide 22

23 Current Fleet Employment PANAMAX FLEET VESSEL CHARTERER GROSS HIRE PERIOD COMMENCED EXPIRES Calm Seas Al Ghurair Resources Llc. Voyage Charter V/C Trip Aug-14 Nov-14 Deep Seas Phaethon International Co. S.A. $ 9,000 T/C Period Aug-14 Nov-14 to Feb-15 Kind Seas Cargill International S.A. $ 14,500 T/C Trip Oct-14 Dec-14 Pearl Seas Phaethon International Co. S.A. $ 9,500 T/C Period Oct-14 Dec-14 to Mar-15 Diamond Seas Swissmarine Asia Pte. Ltd. $ 9,000 T/C Period Oct-14 Feb-15 to Jun-15 Coral Seas Golden Ocean Trading Limited $ 13,000 T/C Trip Nov-14 Nov-14 Golden Seas D'Amico Shipping Pte. Ltd. $ 10,150 T/C Trip Nov-14 Dec-14 Dream Seas Mansel Ltd. $ 13,500 T/C Trip Sep-14 Nov-14 ULTRAMAX FLEET Gentle Seas Peaceful Seas SUPRAMAX FLEET Vanbloom Shipping Ltd. Chinaland Shipping Pte. Ltd. $ 9,000 for 1st 63 days $ 10,500 for balance period $ 10,300 for 1st 65 days $ 12,500 for balance period T/C Trip Oct-14 Dec-14 T/C Trip Nov-14 Jan-15 Sapphire Seas MUR Shipping B.V. $ 6,500 T/C Trip Oct-14 Nov-14 Friendly Seas Western Bulk Carriers A/S $ 12,000 T/C Trip Oct-14 Dec-14 HANDYSIZE FLEET Prosperous Seas Ameropa Asia Pte. Ltd. Voyage Charter V/C Trip Oct-14 Dec-14 Precious Seas Langlois Entreprises Ltd. Voyage Charter V/C Trip Nov-14 Nov-14 Priceless Seas Proud Seas SK Shipping Co. Hyundai Merchant Marine Co. Ltd. PARAGON FLEET EMPLOYMENT $ 4,600 for 1st 70 days $ 9,250 for balance period $ 6,700 for 1st 65 days $ 9,700 for balance period T/C Trip Sep-14 Dec-14 T/C Trip Oct-14 Dec-14 Slide 23