Paragon Shipping Q2 2013 results presentation

Earnings Conference Call Second Quarter & 6 Months Ended June 30, 2013

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

Agenda

2Q 2013 Highlights

Company Update

Drybulk Industry Overview

Financial Update

Investment Summary

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.

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

Chartering Update

(1) Assumes earliest redelivery dates

Fixed Days Optional Period Open Days

NB

s

Priceless Seas

On

th

e W

ate

r

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

Chartering Performance

Consistently beating market since 2009

Source: Clarkson’s Research

US

D P

er

Da

y

(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)

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)


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)

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

0

20

40

60

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


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%)

H113: 35 million dwt delivered vs 13 million dwt scrapped (or 37%)

Millio

n D

wt

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

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

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.

Investor Relations /Media:

Allen & Caron Inc.

Rudy Barrio (Investors)

Tel: (212) 691-8087

Email: [email protected]

Len Hall (Media)

Tel: (949) 474-4300


Company:

Paragon Shipping Inc.

Robert Perri, CFA

Chief Financial Officer

15 Karamanli Ave.

GR 166 73, Voula, Greece

Tel: +30 (210) 8914 600


Appendices

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

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

Statement of Operations Adjustments

Adjusted EBITDA Reconcil iation

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 Reconcil iation

(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

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)

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

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

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 SeasMorgan 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 SeasMorgan 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.

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

Paragon Shipping Q2 2013 results presentation

Business

Transcript of Paragon Shipping Q2 2013 results presentation