BOX SHIPS INC 
By ATHENS, Greece, March 13, 2014 /PRNewswire/ -- Paragon Shipping Inc. (NASDAQ: PRGN) ("Paragon Shipping" or the "Company"), a global shipping transportation company specializing in drybulk cargoes, announced today its results for the fourth quarter and year ended December 31, 2013.
Financial Highlights
(Expressed in thousands of United States Dollars, except for vessel data, TCE and share data)
Quarter Ended Quarter Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
2013 2012 2013
2012
----
Average number of vessels 12.0 13.0 11.2 12.9
------------------------- ---- ---- ---- ----
Time charter equivalent rate
(TCE) (1) 10,563 11,804 11,923 10,729
---------------------------- ------ ------ ------ ------
Net Revenue 12,945 15,571 50,301 56,257
----------- ------ ------ ------ ------
EBITDA (1) 6,858 556 7,577 7,873
--------- ----- --- ----- -----
Adjusted EBITDA (1) 4,409 4,698 24,169 19,657
------------------ ----- ----- ------ ------
Net Income / (Loss) 329 (5,960) (17,557) (16,953)
------------------- --- ------ ------- -------
Adjusted Net Loss (1) (2,120) (1,818) (965) (5,169)
-------------------- ------ ------ ---- ------
Earnings /(Loss) per common
share basic and diluted 0.05 (0.34) (2.84) (1.31)
--------------------------- ---- ----- ----- -----
Adjusted Loss per common share
basic and diluted (1) (0.33) (0.10) (0.16) (0.40)
------------------------------ ----- ----- ----- -----
(1) Please see the table at
the back of this release
for a reconciliation of
TCE to Charter Revenue,
EBITDA and Adjusted
EBITDA to Net Income /
(Loss), Adjusted Net
Income /(Loss) to Net
Income /(Loss) and
Adjusted Earnings /
(Loss) per common share
to Earnings /(Loss) per
common share, the most
directly comparable
financial measures
calculated and presented
in accordance with
generally accepted
accounting principles in
the United States ("U.S.
GAAP").
Management Commentary
Commenting on the results, Michael Bodouroglou, Chairman and Chief Executive Officer of Paragon Shipping, stated, "During the fourth quarter of 2013, we experienced a significant improvement in the time charter market, which boosted our revenues year over year and helped improve our EBITDA and earnings on an adjusted basis."
Mr. Bodouroglou continued, "In 2013, we capitalized on the foundation we set at the end of 2012 and continued to execute on our growth strategy. During 2013, we increased and modernized our fleet with the delivery of one Handysize drybulk vessel, the M/V Priceless Seas, and the purchase of four new Eco-Design Ultramax newbuildings. We transitioned our fleet employment strategy away from medium and long-term time charters to the spot market and short-term contracts, in order to take advantage of the expected improvement in time charter rates in 2014. We also secured financing for our newbuilding vessels that are expected to be delivered in 2014. So far, 2014 has continued to be rather active with respect to our fleet growth. In January 2014, we took delivery of our fourth Handysize drybulk vessel, the M/V Proud Seas. In addition, following the completion of our public offering of 6,785,000 common shares in February 2014, we signed shipbuilding contracts for Eco-Design Kamsarmax newbuildings that increased our current newbuilding program to eight vessels with scheduled deliveries between the second quarter of 2014 and the fourth quarter of 2015."
Mr. Bodouroglou concluded, "Our mission is to continue to position the Company for growth in order to take advantage of what we expect to be a stronger drybulk market in the coming years, which in turn should create additional value for our shareholders."
Fourth Quarter 2013 Financial Results
Gross charter revenue for the fourth quarter of 2013 was $16.5 million, compared to $13.7 million for the fourth quarter of 2012, an increase of 20.7% year over year. The Company reported a net loss of $6.0 million, or $0.34 per basic and diluted share, for the fourth quarter of 2013, calculated based on a weighted average number of basic and diluted shares outstanding for the period of 17,162,948 and reflecting the impact of the non-cash items discussed below. For the fourth quarter of 2012, the Company reported net income of $0.3 million, or $0.05 per basic and diluted share, calculated based on a weighted average number of basic and diluted shares of 6,354,014.
Excluding all non-cash items described below, the adjusted net loss for the fourth quarter of 2013 was $1.8 million, or $0.10 per basic and diluted share, compared to adjusted net loss of $2.1 million, or $0.33 per basic and diluted share, for the fourth quarter of 2012.
EBITDA for the fourth quarter of 2013 was $0.6 million, compared to $6.9 million for the fourth quarter of 2012. EBITDA for the fourth quarter of 2013 was calculated by adding the net loss of $6.0 million to net interest expense, including interest expense from interest rate swaps, and depreciation that in the aggregate amounted to $6.5 million. Adjusted EBITDA, excluding all non-cash items described below, was $4.7 million for the fourth quarter of 2013, compared to $4.4 million for the fourth quarter of 2012.
The Company operated an average of 13.0 vessels during the fourth quarter of 2013, earning an average TCE rate of $11,804 per day, compared to an average of 12.0 vessels during the fourth quarter of 2012, earning an average TCE rate of $10,563 per day.
Total adjusted operating expenses for the fourth quarter of 2013 equaled $9.9 million, or approximately $8,301 per vessel per day, which included vessel operating expenses, management fees, general and administrative expenses and dry-docking costs, and excluded share-based compensation for the period of $0.3 million. For the fourth quarter of 2012, total adjusted operating expenses were $7.4 million, or approximately $6,663 per vessel per day, which included the items mentioned above, and excluded share-based compensation of $0.1 million.
Following the cancellation of one of the two 4,800 TEU containership newbuildings, the Company recorded a loss from contract cancellation of $0.6 million in the fourth quarter of 2013, of which $0.2 million related to capitalized expenses incurred in prior fiscal years.
As of December 31, 2013, the Company owned approximately 13.6% of the outstanding common stock of Box Ships Inc. (NYSE:TEU) ("Box Ships"), a former wholly-owned subsidiary of the Company which successfully completed its initial public offering in April 2011. The investment in Box Ships is accounted for under the equity method and is separately reflected on the Company's unaudited condensed consolidated balance sheets. Based on the unaudited financial statements reported by Box Ships on March 11, 2014, for the fourth quarter of 2013, the Company recorded income of $0.3 million, representing its share of Box Ships' net income for the period, compared to $0.4 million for the fourth quarter of 2012. In the fourth quarter of 2013, we received a cash amount of $0.2 million, representing dividend distributions from Box Ships, compared to $0.8 million received in the fourth quarter of 2012.
As of December 31, 2013, the difference between the fair value and the book value of the Company's investment in Box Ships was considered to be other than temporary and therefore the investment was impaired and the Company recorded a non-cash loss of $2.8 million.
As of December 31, 2013, the change in the fair value of the 65,896 shares of Korea Line Corporation ("KLC"), which the Company received as part of the settlement agreement entered into with KLC in September 2011 and pursuant to the amended KLC rehabilitation plan that was approved by the Seoul Central District Court on March 28, 2013, was considered as other than temporary, and therefore the Company recorded a non-cash loss of $1.0 million in the fourth quarter of 2013.
Fourth Quarter 2013 Non-cash Items
The Company's results for the three months ended December 31, 2013 included the following non-cash items:
-- Write off of capitalized expenses from contract cancellation of $0.2
million, or $0.01 per basic and diluted share.
-- Loss on marketable securities of $1.0 million, or $0.05 per basic and
diluted share.
-- Loss on investment in affiliate of $2.8 million, or $0.17 per basic and
diluted share.
-- An unrealized gain on interest rate swaps of $0.2 million, or $0.01 per
basic and diluted share.
-- Non-cash expenses of $0.3 million, or $0.02 per basic and diluted share,
relating to the amortization of the compensation cost recognized for
non-vested share awards issued to executive officers, directors and
employees.
In the aggregate, these non-cash items decreased the Company's earnings by $4.1 million, which represents a $0.24 decrease in earnings per basic and diluted share, for the three months ended December 31, 2013.
Year ended December 31, 2013 Financial Results
Gross charter revenue for the year ended December 31, 2013 was $59.5 million, compared to $53.2 million for the year ended December 31, 2012. The Company reported a net loss of $17.0 million, or $1.31 per basic and diluted share, for the year ended December 31, 2013, calculated based on a weighted average number of basic and diluted shares outstanding for the period of 12,639,128 and reflecting the impact of the non-cash items discussed below. For the year ended December 31, 2012, the Company reported a net loss of $17.6 million, or $2.84 per basic and diluted share, calculated based on a weighted average number of basic and diluted shares of 6,035,910.
Excluding all non-cash items described below, the adjusted net loss for the year ended December 31, 2013 was $5.2 million, or $0.40 per basic and diluted share, compared to adjusted net loss of $1.0 million, or $0.16 per basic and diluted share, for the year ended December 31, 2012.
EBITDA for the year ended December 31, 2013 was $7.9 million, compared to $7.6 million for the year ended December 31, 2012. EBITDA for the year ended December 31, 2013 was calculated by adding the net loss of $17.0 million to net interest expense, including interest expense from interest rate swaps, and depreciation that in the aggregate amounted to $24.8 million. Adjusted EBITDA, excluding all non-cash items described below, was $19.7 million for the year ended December 31, 2013, compared to $24.2 million for the year ended December 31, 2012.
The Company operated an average of 12.9 vessels during the year ended December 31, 2013, earning an average TCE rate of $10,729 per day, compared to an average of 11.2 vessels during the year ended December 31, 2012, earning an average TCE rate of $11,923 per day.
Total adjusted operating expenses for the year ended December 31, 2013 equaled $37.2 million, or approximately $7,895 per vessel per day, which included vessel operating expenses, management fees, general and administrative expenses and dry-docking costs, and excluded share-based compensation for the period of $1.9 million. For the year ended December 31, 2012, total adjusted operating expenses were $28.3 million, or approximately $6,896 per vessel per day, which included the items mentioned above, and excluded share-based compensation of $2.5 million.
For the year ended December 31, 2013, the Company recorded a $2.3 million gain from vessel early redelivery, mainly representing the total cash compensation, net of commissions, received due to the early termination of the M/V Coral Seas and M/V Deep Seas time charter agreements with Morgan Stanley Capital Group Inc.
Following the cancellation of one of the two 4,800 TEU containership newbuildings, the Company recorded a loss from contract cancellation of $0.6 million in 2013, of which $0.2 million related to capitalized expenses incurred in prior fiscal years.
Based on the unaudited financial statements reported by Box Ships on March 11, 2014, for the year ended December 31, 2013, the Company recorded income of $1.7 million, representing its share of Box Ships' net income for the period, compared to $2.0 million for the year ended December 31, 2012. In the year ended December 31, 2013, we received a cash amount of $1.8 million, representing dividend distributions from Box Ships, compared to $3.7 million received in the year ended December 31, 2012.
In the year ended December 31, 2013, the Company recorded a non-cash loss of $0.4 million relating to the dilution effect from the Company's non-participation in the public offering by Box Ships of 4,000,000 of Box Ships' common shares, which was completed on March 18, 2013. In addition, as of September 30, 2013 and December 31, 2013, the difference between the fair value and the book value of the Company's investment in Box Ships was considered to be other than temporary and therefore the investment was impaired and the Company recorded a non-cash loss of $5.4 million and $2.8 million, respectively. Both items are included in "Loss on investment in affiliate" in the unaudited condensed consolidated statements of comprehensive loss at the end of this release.
Pursuant to the amended KLC rehabilitation plan, in the year ended December 31, 2013, the Company recorded a gain from marketable securities of $3.1 million, representing the fair value of 58,483 additional KLC shares issued to the Company, based on the closing price of KLC shares as of May 9, 2013, the date of issuance. As of September 30, 2013 and December 31, 2013, the change in the fair value of the 65,896 shares of KLC owned by the Company was considered as other than temporary, and therefore the Company recorded a non-cash loss that in the aggregate amounted to $1.9 million in 2013.
Year ended December 31, 2013 Non-cash Items
The Company's results for the year ended December 31, 2013 included the following non-cash items:
-- Write off of capitalized expenses from contract cancellation of $0.2
million, or $0.02 per basic and diluted share.
-- Loss on marketable securities of $1.9 million, or $0.15 per basic and
diluted share.
-- Loss on investment in affiliate of $8.6 million, or $0.66 per basic and
diluted share.
-- An unrealized gain on interest rate swaps of $0.8 million, or $0.06 per
basic and diluted share.
-- Non-cash expenses of $1.9 million, or $0.14 per basic and diluted share,
relating to share based compensation to the management company amounting
to $1.1 million and to the amortization of the compensation cost
recognized for non-vested share awards issued to executive officers,
directors and employees amounting to $0.8 million.
In the aggregate, these non-cash items decreased the Company's earnings by $11.8 million, which represents a $0.91 decrease in earnings per basic and diluted share, for the year ended December 31, 2013.
Cash Flows
For the year ended December 31, 2013, the Company generated net cash from operating activities of $4.6 million, compared to $13.4 million for the year ended December 31, 2012. For the year ended December 31, 2013, net cash used in investing activities was $6.4 million and net cash from financing activities was $15.5 million. For the year ended December 31, 2012, net cash used in investing activities was $15.7 million and net cash from financing activities was $5.4 million.
Time Charter Coverage Update
Pursuant to our chartering strategy, we will continue to employ our vessels on short-term time charters or voyage charters, which generally last for periods of ten days to four months, to be in a position to take advantage of any further strengthening of the spot market as the charter market continues to improve.
Assuming all charter counterparties fully perform under the terms of the charters, based on the earliest redelivery dates and including our newbuilding vessels, we have secured employment for 6% of our fleet capacity for the remainder of 2014.
Follow-On Public Offering
On February 18, 2014, the Company completed a public offering of 6,785,000 of its Class A common shares at $6.25 per share, including the full exercise of the over-allotment option granted to the underwriters to purchase up to 885,000 additional common shares. The gross proceeds from the offering before the underwriting discounts and commissions amounted to approximately $42.4 million (including $5.5 million from the exercise of the over-allotment option). The net proceeds from the offering, after the underwriting discounts and commissions and estimated offering expenses payable by us, amounted to $39.7 million.
Newbuilding Program Update
In December 2013, the Company agreed to acquire shipbuilding contracts for two additional Ultramax newbuilding drybulk carriers. The Ultramax newbuildings are sister ships to the two Ultramax newbuildings the Company previously acquired, have a carrying capacity of 63,500 dwt each and are currently under construction at Yangzhou Dayang Shipbuilding Co. Ltd., member of Sinopacific Shipbuilding Group, with scheduled deliveries in the second quarter of 2015. The total consideration for these two Ultramax newbuildings amounted to $56.5 million.
The Company also entered into an agreement with Zhejiang Ouhua Shipbuilding, a Chinese shipyard, to cancel one of its two 4,800 TEU containership newbuilding contracts at no cost to the Company, to transfer the deposit to the remaining vessel and to reduce its contract price from the original $57.5 million to $55.0 million. The balance of the contract price is due upon the delivery of the vessel in the second quarter of 2014 and is expected to be financed through the loan facility with China Development Bank ("CDB"), subject to certain closing conditions. The Company is currently in discussions with CDB to amend the terms of the credit facility to reflect the cancellation of one of its two 4,800 TEU containership newbuilding contracts.
On January 7, 2014, the Company took delivery of its fourth Handysize drybulk vessel; the M/V Proud Seas. In January 2014, an amount of $21.6 million was paid to the shipyard representing the final installment of the respective vessel, which was financed from the syndicated secured loan facility led by Nordea Bank Finland Plc.
In March 2014, the Company signed shipbuilding contracts for three Kamsarmax newbuilding drybulk carriers. These Eco-Design Kamsarmax newbuildings have a carrying capacity of 81,800 dwt each and will be built at Jiangsu Yangzijiang Shipbuilding Co. Two of the newbuildings are scheduled to be delivered in the second quarter of 2015 and one is scheduled to be delivered in the fourth quarter of 2015. The total consideration for these three newbuilding contracts is $91.7 million.
Financing Update
In December 2013, the Company entered into a commitment with HSH Nordbank AG ("HSH"), subject to the execution of definitive documentation, for a $47.0 million senior secured post-delivery term loan facility, for the refinancing of the M/V Friendly Seas and the partial financing of the first two Ultramax newbuilding drybulk carriers, the Hull no. DY152 and the Hull no. DY153. For M/V Friendly Seas, HSH agreed to finance the lower of $12.6 million or 60% of the vessel's market value upon the respective drawdown date. For each of the two Ultramax vessels, HSH agreed to finance the lower of $17.2 million or 65% of the vessels' market value upon their delivery.
On January 20, 2014, the Company agreed with Unicredit Bank AG to extend the existing waiver relating to the EBITDA coverage ratio covenant contained in the respective loan facility until January 1, 2015.
Conference Call and Webcast details
The Company's management team will host a conference call to discuss its fourth quarter and year ended December 31, 2013 results on March 14, 2014 at 9:00 am Eastern Time.
Participants should dial into the call ten minutes before the scheduled time using the following numbers 1-877-300-8521 (USA) or +1-412-317-6026 (international) to access the call. A replay of the conference call will be available for seven days and can be accessed by dialing 1-877-870-5176 (USA) or +1-858-384-5517 (international) and using passcode 10042306.
Slides and audio webcast
There will also be a simultaneous live webcast through the Company's website, www.paragonship.com. Participants should register on the website approximately ten minutes prior to the start of the webcast. If you would like a copy of the release mailed or faxed, please contact Allen & Caron Investor Relations at 212-691-8087.
About Paragon Shipping Inc.
Paragon Shipping Inc. is an international shipping company incorporated under the laws of the Republic of the Marshall Islands with executive offices in Athens, Greece, specializing in the transportation of drybulk cargoes. Paragon Shipping's current fleet consists of fourteen drybulk vessels with a total carrying capacity of 853,699 dwt. In addition, Paragon Shipping's current newbuilding program consists of two Ultramax drybulk carriers and one 4,800 TEU containership that are scheduled to be delivered in 2014, as well as two Ultramax drybulk carriers and three Kamsarmax drybulk carriers that are scheduled to be delivered in 2015. Paragon Shipping has granted Box Ships Inc., an affiliated company, the option to acquire its containership under construction. For more information, visit: www.paragonship.com. The information contained on the Paragon Shipping's website does not constitute part of this press release.
Forward-Looking Statements
Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Act of 1995. These forward-looking statements are based on our current expectations and beliefs and are subject to a number of risk factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Such risks and uncertainties include, without limitation, the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand for drybulk shipping capacity, changes in our operating expenses, including bunker prices, dry-docking and insurance costs, the market for our vessels, availability of financing and refinancing, charter counterparty performance, ability to obtain financing and comply with covenants in such financing arrangements, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, vessels breakdowns and instances of off-hires and other factors, as well as other risks that have been included in filings with the Securities and Exchange Commission, all of which are available at www.sec.gov.
Contacts:
Paragon Shipping Inc.
Robert Perri, CFA
Chief Financial Officer
ir@paragonshipping.gr
Allen & Caron Inc.
Rudy Barrio (Investors)
r.barrio@allencaron.com
(212) 691-8087
Len Hall (Media)
len@allencaron.com
(949) 474-4300
- Tables Follow -
Fleet List
Drybulk Fleet
The following tables represent our drybulk fleet and the drybulk newbuilding vessels that we have agreed to acquire as of March 13, 2014.
Operating Drybulk Fleet
Name Type /No. of
Vessels Dwt Year Built
---- ------------ --- ----------
Panamax
-------
Dream Seas Panamax 75,151 2009
---------- ------- ------ ----
Coral Seas Panamax 74,477 2006
---------- ------- ------ ----
Golden Seas Panamax 74,475 2006
----------- ------- ------ ----
Pearl Seas Panamax 74,483 2006
---------- ------- ------ ----
Diamond Seas Panamax 74,274 2001
------------ ------- ------ ----
Deep Seas Panamax 72,891 1999
--------- ------- ------ ----
Calm Seas Panamax 74,047 1999
--------- ------- ------ ----
Kind Seas Panamax 72,493 1999
--------- ------- ------ ----
Total Panamax 8 592,291
------------- --- -------
Supramax
--------
Friendly Seas Supramax 58,779 2008
------------- -------- ------ ----
Sapphire Seas Supramax 53,702 2005
------------- -------- ------ ----
Total Supramax 2 112,481
-------------- --- -------
Handysize
---------
Prosperous Seas Handysize 37,293 2012
--------------- --------- ------ ----
Precious Seas Handysize 37,205 2012
------------- --------- ------ ----
Priceless Seas Handysize 37,202 2013
-------------- --------- ------ ----
Proud Seas Handysize 37,227 2014
---------- --------- ------ ----
Total Handysize 4 148,927
--------------- --- -------
Grand Total 14 853,699
----------- --- -------
Drybulk Newbuildings that we have agreed to acquire
Hull no. Type / No. of Vessels Dwt Expected Delivery
-------- --------------------- --- -----------------
Ultramax
--------
Hull no. DY152 Ultramax 63,500 Q2 2014
-------------- -------- ------ -------
Hull no. DY153 Ultramax 63,500 Q3 2014
-------------- -------- ------ -------
Hull no. DY4050 Ultramax 63,500 Q2 2015
--------------- -------- ------ -------
Hull no. DY4052 Ultramax 63,500 Q2 2015
--------------- -------- ------ -------
Total Ultramax 4 254,000
-------------- --- -------
Kamsarmax
---------
Hull no. YZJ1144 Kamsarmax 81,800 Q2 2015
---------------- --------- ------ -------
Hull no. YZJ1145 Kamsarmax 81,800 Q2 2015
---------------- --------- ------ -------
Hull no. YZJ1142 Kamsarmax 81,800 Q4 2015
---------------- --------- ------ -------
Total Kamsarmax 3 245,400
--------------- --- -------
Grand Total 7 499,400
----------- --- -------
Containership Fleet
The following table represents the containership newbuilding vessel that we have agreed to acquire as of March 13, 2014.
Containership Newbuilding that we have agreed to acquire
Hull no. TEU Dwt Expected Delivery
-------- --- --- -----------------
Box King (1) 4,800 56,500 Q2 2014
------------ ----- ------ -------
Total 4,800 56,500
----- ----- ------
(1) The Company has
granted to Box
Ships an option to
purchase.
Summary Fleet Data
(Expressed in United States Dollars where applicable)
Quarter Ended Quarter Ended Year ended Year ended
December 31, 2012 December 31, 2013 December 31, 2013
December 31, 2012
--- ---
FLEET DATA
----------
Average number of vessels (1) 12.0 13.0 11.2 12.9
---------------------------- ---- ---- ---- ----
Calendar days for fleet (2) 1,104 1,196 4,099 4,717
-------------------------- ----- ----- ----- -----
Available days for fleet (3) 1,104 1,196 4,099 4,652
--------------------------- ----- ----- ----- -----
Operating days for fleet (4) 1,083 1,180 4,063 4,622
--------------------------- ----- ----- ----- -----
Fleet utilization (5) 98.1% 98.7% 99.1% 99.4%
-------------------- ---- ---- ---- ----
AVERAGE DAILY RESULTS
---------------------
Time charter equivalent (6) 10,563 11,804 11,923 10,729
-------------------------- ------ ------ ------ ------
Vessel operating expenses (7) 4,328 4,185 4,588 4,401
---------------------------- ----- ----- ----- -----
Dry-docking expenses (8) - - - 360
----------------------- --- --- --- ---
Management fees - related party adjusted (9) 1,001 1,049 999 1,023
------------------------------------------- ----- ----- --- -----
General and administrative expenses adjusted
(10) 1,334 3,067 1,309 2,111
-------------------------------------------- ----- ----- ----- -----
Total vessel operating expenses adjusted (11) 6,663 8,301 6,896 7,895
-------------------------------------------- ----- ----- ----- -----
(1) Average number of vessels is
the number of vessels that
constituted our fleet for
the relevant period, as
measured by the sum of the
number of calendar days each
vessel was a part of our
fleet during the period
divided by the number of
days in the period.
(2) Calendar days for the fleet
are the total days the
vessels were in our
possession for the relevant
period.
(3) Available days for the fleet
are the total calendar days
for the relevant period less
any off-hire days
associated with scheduled
dry-dockings or special or
intermediate surveys.
(4) Operating days for the fleet
are the total available days
for the relevant period less
any off-hire days due to
any reason, other than
scheduled dry-dockings or
special or intermediate
surveys, including
unforeseen circumstances.
Any idle days relating to
the days a vessel remains
unemployed are included in
operating days.
(5) Fleet utilization is the
percentage of time that our
vessels were able to
generate revenues and is
determined by dividing
operating days by fleet
available days for the
relevant period.
(6) Time charter equivalent
("TCE") is a measure of the
average daily revenue
performance of a vessel on a
per voyage basis. Our method
of calculating TCE is
consistent with industry
standards and is determined
by dividing Net Revenue
generated from charters less
voyage expenses by operating
days for the relevant time
period. Voyage expenses
consist of all costs that
are unique to a particular
voyage, primarily including
port expenses, canal dues,
war risk insurances and fuel
costs, net of gains or
losses from the sale of
bunkers to charterers. TCE
is a non-GAAP standard
shipping industry
performance measure used
primarily to compare period-
to-period changes in a
shipping company's
performance despite changes
in the mix of charter types
(i.e., spot voyage charters,
time charters and bareboat
charters) under which the
vessels may be employed
between the periods.
(7) Daily vessel operating
expenses, which includes
crew costs, provisions, deck
and engine stores,
lubricating oil, insurance,
maintenance and repairs, is
calculated by dividing
vessel operating expenses by
fleet calendar days for the
relevant time period.
(8) Daily dry-docking expenses
are calculated by dividing
dry-docking expenses by
fleet calendar days for the
relevant time period.
(9) Daily management fees -
related party adjusted are
calculated by dividing
management fees -related
party, excluding share based
compensation to the
management company, by fleet
calendar days for the
relevant time period.
(10) Daily general and
administrative expenses
adjusted are calculated by
dividing general and
administrative expenses,
excluding non-cash expenses
relating to the amortization
of the share based
compensation cost for non-
vested share awards, by
fleet calendar days for the
relevant time period.
(11) Total vessel operating
expenses ("TVOE") is a
measurement of our total
expenses associated with
operating our vessels. TVOE
is the sum of vessel
operating expenses, dry-
docking expenses, management
fees and general and
administrative expenses.
Daily TVOE adjusted is
calculated by dividing TVOE,
excluding non-cash expenses
relating to the amortization
of the share based
compensation cost for non-
vested share awards and
share based compensation to
the management company, by
fleet calendar days for the
relevant time period.
Time Charter Equivalents Reconciliation
(Expressed in thousands of United States Dollars where applicable, except for TCE)
Quarter Ended Quarter Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
2012 2013 2012 2013
---- ---- ---- ----
Charter
Revenue 13,682 16,509 53,219 59,531
-------- ------ ------ ------ ------
Commissions (737) (938) (2,918) (3,274)
----------- ---- ---- ------ ------
Voyage
Expenses,
net (1,505) (1,642) (1,856) (6,669)
---------- ------ ------ ------ ------
Net
Revenue,
net of
voyage
expenses 11,440 13,929 48,445 49,588
--------- ------ ------ ------ ------
Total
operating
days 1,083 1,180 4,063 4,622
---------- ----- ----- ----- -----
Time
Charter
Equivalent 10,563 11,804 11,923 10,729
----------- ------ ------ ------ ------
Condensed Cash Flow Information (Unaudited)
(Expressed in thousands of United States Dollars)
Year Ended Year Ended
December 31, 2012 December 31, 2013
----------------- -----------------
Cash and Cash
Equivalents,
beginning of period 14,564 17,677
-------------------- ------ ------
Cash generated from / (used in):
--------------------------------
Operating Activities 13,377 4,564
-------------------- ------ -----
Investing Activities (15,702) (6,442)
-------------------- ------- ------
Financing Activities 5,438 15,503
-------------------- ----- ------
Net increase in Cash
and Cash
Equivalents 3,113 13,625
-------------------- ----- ------
Cash and Cash
Equivalents, end of
period 17,677 31,302
-------------------- ------ ------
Reconciliation of U.S. GAAP Financial Information to Non-GAAP Financial Information
EBITDA and Adjusted EBITDA Reconciliation (1)
(Expressed in thousands of United States Dollars)
Quarter Ended Quarter Ended Year Ended Year Ended
December 31, 2012 December 31, 2013 December 31, 2012 December 31, 2013
----------------- ----------------- ----------------- -----------------
Net Income / (Loss) 329 (5,960) (17,557) (16,953)
------------------- --- ------ ------- -------
Plus Net interest expense, including interest expense from
interest rate swaps 2,454 2,213 8,748 7,839
---------------------------------------------------------- ----- ----- ----- -----
Plus Depreciation 4,075 4,303 16,386 16,987
----------------- ----- ----- ------ ------
EBITDA 6,858 556 7,577 7,873
------ ----- --- ----- -----
Adjusted EBITDA Reconciliation
------------------------------
Net Income / (Loss) 329 (5,960) (17,557) (16,953)
------------------- --- ------ ------- -------
Write off of capitalized expenses from contract
cancellation - 233 - 233
----------------------------------------------- --- --- --- ---
Loss on marketable securities - 959 980 1,911
----------------------------- --- --- --- -----
Gain from debt extinguishment (1,893) - (1,893) -
----------------------------- ------ --- ------ ---
Loss on investment in affiliate - 2,852 16,985 8,620
------------------------------- --- ----- ------ -----
Unrealized gain on interest rate swaps (692) (175) (2,017) (835)
-------------------------------------- ---- ---- ------ ----
Non-cash expenses from the amortization of share based
compensation cost recognized and share based compensation
to the management company 136 273 2,537 1,855
---------------------------------------------------------- --- --- ----- -----
Adjusted Net Loss (2,120) (1,818) (965) (5,169)
----------------- ------ ------ ---- ------
Plus Net interest expense, including interest expense from
swaps 2,454 2,213 8,748 7,839
---------------------------------------------------------- ----- ----- ----- -----
Plus Depreciation 4,075 4,303 16,386 16,987
----------------- ----- ----- ------ ------
Adjusted EBITDA 4,409 4,698 24,169 19,657
--------------- ----- ----- ------ ------
(1) The Company considers
EBITDA to represent Net
Income /(Loss) plus net
interest expense,
including interest
expense from interest
rate swaps, and
depreciation and
amortization. The
Company's management uses
EBITDA and Adjusted
EBITDA as a performance
measure. EBITDA and
Adjusted EBITDA are not
items recognized by U.S.
GAAP and should not be
considered as an
alternative to Net Income
/(Loss), Operating
Income /(Loss) or any
other indicator of a
Company's operating
performance required by
U.S. GAAP. The Company's
definition of EBITDA and
Adjusted EBITDA may not
be the same as that used
by other companies in the
shipping or other
industries. The Company
believes that EBITDA is
useful to investors
because the shipping
industry is capital
intensive and may involve
significant financing
costs. The Company
excluded non-cash items
to derive the Adjusted
Net Income /(Loss) and
the Adjusted EBITDA
because the Company
believes that these
adjustments provide
additional information on
the fleet operational
results.
Reconciliation of U.S. GAAP Financial Information to Non-GAAP Financial Information
Adjusted Net Income / (Loss) and Adjusted Earnings / (Loss) per common share Reconciliation
(Expressed in thousands of United States Dollars - except for shares and share data)
U.S. GAAP Financial Information Quarter Ended Quarter Ended Year Ended Year Ended
December 31, 2012 December 31, 2013 December 31, 2012 December 31, 2013
--- ----------------- ----------------- ----------------- -----------------
Net Income / (Loss) 329 (5,960) (17,557) (16,953)
------------------- --- ------ ------- -------
Net Income /(Loss) attributable to non-vested
share awards 6 (123) (444) (352)
--------------------------------------------- --- ---- ---- ----
Net Income /(Loss) available to common
shareholders 323 (5,837) (17,113) (16,601)
-------------------------------------- --- ------ ------- -------
Weighted average number of common shares basic
and diluted 6,354,014 17,162,948 6,035,910 12,639,128
---------------------------------------------- --------- ---------- --------- ----------
Earnings /(Loss) per common share basic and
diluted 0.05 (0.34) (2.84) (1.31)
------------------------------------------- ---- ----- ----- -----
Reconciliation of Net Income / (Loss) to Adjusted Net Income / (Loss)
--------------------------------------------------------------
Net Income / (Loss) 329 (5,960) (17,557) (16,953)
------------------- --- ------ ------- -------
Write off of capitalized expenses from contract
cancellation - 233 - 233
----------------------------------------------- --- --- --- ---
Loss on marketable securities - 959 980 1,911
----------------------------- --- --- --- -----
Gain from debt extinguishment (1,893) - (1,893) -
----------------------------- ------ --- ------ ---
Loss on investment in affiliates - 2,852 16,985 8,620
-------------------------------- --- ----- ------ -----
Unrealized gain on interest rate swaps (692) (175) (2,017) (835)
-------------------------------------- ---- ---- ------ ----
Non-cash expenses from the amortization of
share based compensation cost recognized and
share based compensation to the management
company 136 273 2,537 1,855
--------------------------------------------- --- --- ----- -----
Adjusted Net Loss (1) (2,120) (1,818) (965) (5,169)
-------------------- ------ ------ ---- ------
Adjusted Net Loss attributable to non-vested
share awards (38) (37) (24) (108)
-------------------------------------------- --- --- --- ----
Adjusted Net Loss available to common
shareholders (2,082) (1,781) (941) (5,061)
------------------------------------- ------ ------ ---- ------
Weighted average number of common shares basic
and diluted 6,354,014 17,162,948 6,035,910 12,639,128
---------------------------------------------- --------- ---------- --------- ----------
Adjusted Loss per common share basic and
diluted (1) (0.33) (0.10) (0.16) (0.40)
---------------------------------------- ----- ----- ----- -----
(1) Adjusted Net Income /
(Loss) and Adjusted
Earnings /(Loss) per
common share are not
items recognized by U.S.
GAAP and should not be
considered as
alternatives to Net
Income /(Loss) and
Earnings /(Loss) per
common share,
respectively, or any
other indicator of a
Company's operating
performance required by
U.S. GAAP. The Company
excluded non-cash items
to derive at the
Adjusted Net Income /
(Loss) and the Adjusted
Earnings /(Loss) per
common share basic and
diluted because the
Company believes that
these adjustments
provide additional
information on the fleet
operational results. The
Company's definition of
Adjusted Net Income /
(Loss) and Adjusted
Earnings /(Loss) per
common share may not be
the same as that used by
other companies in the
shipping or other
industries.
Paragon Shipping Inc.
Unaudited Condensed Consolidated Balance Sheets
As of December 31, 2012 and December 31, 2013
(Expressed in thousands of United States Dollars)
------------------------------------------------
December 31, 2012 December 31, 2013
Assets
Cash and restricted cash
(current and non-
current) 27,687 41,312
Vessels, net 298,376 306,136
Advances for vessels
under construction 49,593 45,209
Other fixed assets, net 498 596
Investment in affiliate 19,988 11,309
Loan to affiliate 14,000 -
Other assets 9,833 14,984
Total Assets 419,975 419,546
------------ ------- -------
Liabilities and
Shareholders' Equity
Total debt 195,542 180,115
Total other liabilities 8,912 6,780
Total shareholders'
equity 215,521 232,651
Total Liabilities and
Shareholders' Equity 419,975 419,546
--------------------- ------- -------
Paragon Shipping Inc.
Unaudited Condensed Consolidated Statements of Comprehensive Income / (Loss)
For the three months ended December 31, 2012 and 2013
(Expressed in thousands of United States Dollars - except for shares and share data)
-----------------------------------------------------------------------------------
Three Months Ended Three Months Ended
December 31, 2012 December 31, 2013
Revenue
Charter revenue 13,682 16,509
Commissions (737) (938)
Net Revenue 12,945 15,571
----------- ------ ------
Expenses / (Income)
Voyage expenses, net 1,505 1,642
Vessels operating
expenses 4,778 5,005
Management fees -
related party 1,105 1,254
Depreciation 4,075 4,303
General and
administrative
expenses 1,608 3,940
Bad debt provisions 125 (69)
Loss from contract
cancellation - 569
Loss from marketable
securities, net - 959
Other income (47) (638)
Operating Loss (204) (1,394)
-------------- ---- ------
Other Income /
(Expenses)
Interest and finance
costs (1,946) (2,022)
Gain /(loss) on
derivatives, net 13 (41)
Interest income 171 24
Equity in net income
of affiliate 398 342
Gain from debt
extinguishment 1,893 -
Loss on investment in
affiliate - (2,852)
Foreign currency gain
/(loss) 4 (17)
Total Other Income /
(Expenses), net 533 (4,566)
-------------------- --- ------
Net Income / (Loss) 329 (5,960)
Other Comprehensive
Income /(Loss)
Unrealized gain /
(loss) on cash flow
hedges 10 (61)
Transfer of realized
loss on cash flow
hedges to "Interest
and finance costs" 75 79
Equity in other
comprehensive loss
of affiliate (107) -
Unrealized gain /
(loss) on change in
fair value of
marketable
securities 153 (959)
Transfer of
impairment of
marketable
securities to - 959
"Loss from marketable
securities, net"
---------------------
Total Other
Comprehensive Income 131 18
Comprehensive Income
/(Loss) 460 (5,942)
Earnings /(Loss) per
Class A common
share, basic and
diluted $0.05 ($0.34)
Weighted average
number of Class A
common shares, basic
and diluted 6,354,014 17,162,948
Paragon Shipping Inc.
Unaudited Condensed Consolidated Statements of Comprehensive Loss
For the years ended December 31, 2012 and 2013
(Expressed in thousands of United States Dollars - except for shares and share data)
-----------------------------------------------------------------------------------
Year Ended Year Ended
December 31, 2012 December 31, 2013
Revenue
Charter revenue 53,219 59,531
Commissions (2,918) (3,274)
Net Revenue 50,301 56,257
----------- ------ ------
Expenses / (Income)
Voyage expenses, net 1,856 6,669
Vessels operating
expenses 18,808 20,759
Dry-docking expenses - 1,698
Management fees -
related party 4,095 5,874
Depreciation 16,386 16,987
General and
administrative
expenses 7,902 10,764
Bad debt provisions 125 -
Gain from vessel
early redelivery - (2,268)
Loss from contract
cancellation - 569
Gain from marketable
securities, net (414) (1,202)
Other income (751) (638)
Operating Income /
(Loss) 2,294 (2,955)
------------------ ----- ------
Other Income /
(Expenses)
Interest and finance
costs (6,745) (7,440)
Loss on derivatives,
net (714) (95)
Interest income 729 531
Equity in net income
of affiliate 1,987 1,652
Gain from debt
extinguishment 1,893 -
Loss on investment in
affiliate (16,985) (8,620)
Foreign currency loss (16) (26)
Total Other Expenses,
net (19,851) (13,998)
--------------------- ------- -------
Net Loss (17,557) (16,953)
Other Comprehensive
Income /(Loss)
Unrealized (loss) /
gain on cash flow
hedges (848) 131
Transfer of realized
loss on cash flow
hedges to "Interest
and finance costs" 175 312
Equity in other
comprehensive (loss)
/income of
affiliate (107) 77
Unrealized loss on
change in fair value
of marketable
securities (827) (2,064)
Transfer of
impairment of
marketable
securities to 980 1,911
"Gain from marketable
securities, net"
---------------------
Total Other
Comprehensive (Loss)
/Income (627) 367
Comprehensive Loss (18,184) (16,586)
Loss per Class A
common share, basic
and diluted (1) ($2.84) ($1.31)
Weighted average
number of Class A
common shares, basic
and diluted (1) 6,035,910 12,639,128
SOURCE Paragon Shipping Inc.
