Paragon Shipping Q4 2012 results presentation
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Earnings Conference Call Fourth Quarter & Year Ended December 31, 2012
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
4Q & Full Year 2012 Financial Highlights
Company Update
Industry Overview
Financial Update
Investment Summary
Slide 4
Financial Highlights - 4Q & Full Year 2012
EBITDA Adjusted (1) Net Income Adjusted (1)
(1) Adjusted for non cash items
US
D M
illio
n
US
D M
illio
n
Q4 2012 Q4 2011 F.Y. 2012 F.Y. 2011
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
18.3 16.5
13.1
9.9
7.0 6.6 6.1 4.4
0
5
10
15
20
Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412
6.8
5.2
2.9
0.5 1.1
0.5 (0.4)
(2.1) -4
-2
0
2
4
6
8
Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412
Slide 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 6
1) As of February 18, 2013
2) Including newbuilding deposits, KLC Shares, loan to Box Ships and M.V. adjusted investment in Box Ships
Leverage Ratio (1)
Financing Update
Cash (including restricted cash) $ 25 m
Total Debt $ 194 m
Net Debt $ 169 m
M.V. Adjusted Net Worth (2)
$ 111 m
Total Capitalization $ 280 m
Net Debt / Total Capitalization 60%
Leverage ratio of 60%
Reduced debt repayment requirements
Scheduled Loan Repayments (USD Million)
192 188
185
181
6.7 4.7
42.8
4.7 3.6 3.6 3.6 3.6
$150
$160
$170
$180
$190
$200
$0
$15
$30
$45
$60
$75
Q113 Q213 Q313 Q413
Debt O/S Loan Repaym. before Restr. Loan Repaym. after Restr.
Slide 7
Newbuilding Update - M/V Priceless Seas Delivered
Fleet size
increased to 13
drybulk vessels
Debt-Free Vessel,
Low Breakeven
Point
Slide 8
Chartering Update
Min. Hire
Receipts
F ixed Days Optional Period Open Days $36.9 m
NB
s
Priceless Seas $0.4 m
Diamond Seas $0.8 m
On
th
e W
ate
r
Sapphire Seas
Golden Seas
Calm Seas
Friendly Seas
Fixed
Revenue Days ( 1) 55%
Hull No. 657 -
-
-
Proud Seas
Hull No. 656
0%
2016
Q1 Q2 Q3 Q4
$2.7 m
$0.9 m
$0.4 m
2015
Q4
Remainder
2013
Q3 Q1
2014
Q1 Q2 Q2Q4
Dream Seas
Pearl Seas
Coral Seas
Deep Seas
Q2
Precious Seas
Kind Seas
Prosperous Seas
Q1 Q4 Q3
0%7%
Q3
$5.2 m
$5.6 m
$2.9 m
$4.0 m
$2.0 m
$3.1 m
$2.9 m
$6.0 m
Average charter term remaining (1) = 0.6 years
(1) Assumes earliest redelivery dates
$36.9 million contracted minimum net hire receipts as of Dec. 31, 2012
Slide 9
0
20
40
60
Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13
Capesize Panamax
Supramax Handysize
Linear (Capesize) Linear (Panamax)
Linear (Supramax) Linear (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)
0
10,000
20,000
30,000
40,000
Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13
Capesize
Panamax
Supramax
Handysize
Slide 10
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
0
20
40
60
80
100
2013 2014 2015+
Capesize Panamax Supramax Handysize
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 19% of existing fleet
More than 1,150 vessels added to the fleet in 2012, while about 580
vessels were scrapped
Millio
n D
wt
Deletions vs Newbuilding Deliveries
92 m
33 m
6 m
12
8
10 9 10
14
7 6
8
6 5
3 2 3
4 4 3 2 2 2
4 3 3 2
10
5 6 5
7
12
5 3
4 3 2 2
0
5
10
15
January February March April May June July August September October November December
Deliveries Deletion Net Growth
Slide 11
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%
10.5%
2.2%
8.9%
5.4%
16.9% 16.9%
4.8%
2.5%
5.5%
Tra
de
in
Millio
n T
on
ne
s
Slide 12
Adjusted EBITDA Reconcil iation
Adjusted Net Loss (2,120) (965)
Plus Net interest expense, including swap interest 2,454 8,748
Plus Depreciation 4,075 16,386
Adjusted EBITDA 4,408 24,169
Statement of Operations Adjustments
3 Months Ended Year Ended
Dec. 31, 2012 Dec. 31, 2012
Adjusted Net Loss Reconcil iation
(USD thousands except for per share data)
Net Income / (Loss) 329 (17,557)
Loss on investment in affiliates - 16,985
Gain from debt extinguishment (1,893) (1,893)
Loss on marketable securities - 980
Unrealized gain from interest rate swaps (692) (2,017)
Share based compensation 136 2,537
Adjusted Net Loss (2,120) (965)
Non-cash recurring
Non-cash recurring
Non-cash
Non-cash
Non-cash
Slide 13
Operating Performance – Full Year 2012
Year Ended
Dec. 31, 2012
Fleet Data
Average number of vessels 11.2
Calendar days for f leet 4,099
Available days for f leet 4,099
Operating days for f leet 4,063
Fleet util ization 99.1%
Time Charter Equivalent 11,923 48,444,715
Vessel operating expenses (4,588) (18,808,084)
Management fees (999) (4,094,744)
G&A expenses (ex . non-cash items) (1,309) (5,365,060)
Total Vessel Operating Expenses (TVOE) (6,896) (28,267,888)
Free Cash F low from Operations 5,027 20,176,827
Net interest expense, including swap interest (2,134) (8,747,785)
Loan repayments ( 1)
(4 ,884) (20,018,437)
Dividends received from affil iates 906 3,712,500
Free Cash F low (1,085) (4,876,895)
Actual AmountsDaily Results
(1) Excluding loan prepayments
Slide 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.
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
Slide 16
Appendices
Slide 17
Adjustments Adjusted
000's 3 Months Ended 3 Months Ended 3 Months Ended
Dec. 31, 2012 Dec. 31, 2012 Dec. 31, 2012
Revenue
Time charter revenue $13,682 $13,682
Commisssions (738) (738)
Net Revenue 12,945 12,945
Expenses / (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
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)
Interest income 171 171
Equity in net income of affiliate 398 398
Gain from debt extinguishment 1,893 (1,893) -
Foreign currency gain 4 4
Total Other Expenses, net 533 (2,585) (2,052)
$329 ($2,449) ($2,120)
6,354 6,354 6,354
$0.05 ($0.38) ($0.33)
Net Income / (Loss)
Weighted average number of shares
Earnings / (Loss) per Common Share
Non-cash recurring
Statement of Operations – 4Q 2012
Non-cash recurring
Non-cash
Slide 18
Adjustments Adjusted
000's Year Ended Year Ended Year Ended
Dec. 31, 2012 Dec. 31, 2012 Dec. 31, 2012
Revenue
Time charter revenue $53,219 $53,219
Commisssions (2,918) (2,918)
Net Revenue 50,301 50,301
Expenses / (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
Bad debt provisions 125 125
Gain from marketable securities (414) 980 (1,395)
Other income (751) (751)
Total Operating Expenses 48,007 3,517 44,490
Operating Income 2,294 3,517 5,811
Other Income / (Expense)
Interest and finance costs (6,745) (6,745)
Loss on derivatives, net (714) (2,017) (2,731)
Interest income 729 729
Equity in net income of affiliate 1,987 1,987
Gain from debt extinguishment 1,893 (1,893) -
Loss on investment in affiliate (16,985) 16,985 -
Foreign currency loss (15) (15)
Total Other Expenses, net (19,851) 13,075 (6,777)
($17,557) $16,592 ($965)
6,036 6,036 6,036
($2.84) $2.68 ($0.16)
Net (Loss) / Income
Weighted average number of shares
(Loss) / Earnings per Common Share
Non-cash recurring
Statement of Operations – Full Year 2012
Non-cash recurring
Non-cash
Non-cash
Non-cash
Slide 19
Balance Sheet & Cash Flow Statement
(US$ 000's) 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
Shareholders'equity 215,628 221,224
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY 420,082 432,074
(US$ 000's) 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 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 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 22
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 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
$ 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 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
$ 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 STX Pan Ocean $ 6,000 About 30 Days Mar-13 Apr-13
Prosperous Seas
Precious Seas
Cargill International
Cargill International
Golden Seas Mansel (Vitol S.A.)
Coral Seas
PARAGON FLEET EMPLOYMENT
Deep Seas Morgan Stanley
Morgan Stanley
Slide 23
Vessel Next DD Estimated Estimated
Type Quarter Budget (1)
Offhire Days (1)
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
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
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