Paragon Shipping Inc. Reports Fourth Quarter And Year Ended December 31, 2013 Results - Net revenue of $15.6 million in the fourth quarter of 2013, up 20.3% year over year

- Adjusted EBITDA of $4.7 million in the fourth quarter of 2013, up 6.6% year over year

- Adjusted net loss of $1.8 million, or $0.10 per common share in the fourth quarter of 2013

- Cancelled one 4,800 TEU containership newbuilding and reduced the contract price on the one remaining containership

- Purchased two additional Eco-Design Ultramax newbuilding drybulk carriers, bringing the total to four

- Secured financing for two Ultramax newbuilding drybulk carriers (Hull no. DY152 and Hull no. DY153)

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

December 31,

2012

Quarter Ended

December 31,
2013

Year Ended

December 31,
2012

Year Ended

December 31,
2013

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
December 31, 2012

Quarter Ended
December 31, 2013

Year ended

 December 31, 2012

Year ended
December 31, 2013

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

December 31,
2012

Quarter Ended

December 31,
2013

Year Ended

December 31,
2012

Year Ended

December 31,
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

December 31, 2012

Year Ended

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
December 31, 2012

Quarter Ended
December 31, 2013

Year Ended
December 31, 2012

Year Ended
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

December 31, 2012

Quarter Ended

December 31, 2013

Year Ended

December 31, 2012

Year Ended

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
"Loss from marketable securities, net"


-


959

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
"Gain from marketable securities, net"


980


1,911

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.



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