Time Charter Revenue Increases 130% to $43.6 Million
GAAP Diluted EPS of $0.69 vs. ($0.98) in Prior Year; Adjusted Diluted
EPS of $0.54 vs. $0.24
ATHENS, Greece, Nov. 12, 2008 (GLOBE NEWSWIRE) -- Paragon Shipping Inc. (Nasdaq:PRGN), a global shipping transportation company specializing in drybulk cargoes, announced today its results for the three and nine months ended September 30, 2008.
Commenting on the results, Michael Bodouroglou, Chairman and Chief Executive Officer of Paragon Shipping, stated, "Once again we are pleased to announce a profitable quarter of solid financial and operational performance. The growth in revenues and earnings that we achieved over the same quarter last year demonstrates our successful execution against our operating strategy. The main drivers behind our success have been the growth of our fleet and balanced chartering strategy, combined with a focus on tight cost controls across the board."
Mr. Bodouroglou continued, "The global credit crisis has clearly had a profound effect on the drybulk market in recent weeks and trade finance, which underpins 90% of international trade, has slowed significantly. That said, we believe that infrastructure projects underway in China and other developing markets will continue to support strong underlying demand fundamentals for drybulk commodities. As a result, we believe the current situation will not continue for the long term."
Mr. Bodouroglou concluded, "With 100% of our vessel days currently chartered in 2008 and 85% chartered in 2009 with established charterers, we will remain relatively insulated from short-term fluctuations in our markets, provided that each of our customers continues to perform under their existing charters. Our cash flow and liquidity position also remain strong, positioning us to take advantage of vessel acquisition opportunities that we expect will appear in the current environment."
Third Quarter 2008 Financial Results:
Time charter revenue for the third quarter of 2008 was $43.6 million, compared to $19.0 million for the third quarter of 2007. The Company reported net income of $18.9 million, or $0.70 and $0.69 per basic and diluted share, respectively, for the third quarter of 2008, calculated on 27,034,270 weighted average number of basic shares, and on 27,207,826 weighted average number of diluted shares, outstanding for the period and reflecting the impact of the non-cash items discussed below. For the third quarter of 2007, the Company reported net loss of ($14.2) million, or ($0.98) per basic and diluted share, calculated on 17,491,591 weighted average number of basic and diluted shares.
Excluding all non-cash items described below, adjusted net income for the third quarter of 2008 was $14.6 million, or $0.54 per basic and diluted share. This compares to adjusted net income of $4.3 million, or $0.24 per basic and diluted share, for the third quarter of 2007. Please refer to the table at the back of this release for a reconciliation of GAAP earnings per share to non-GAAP adjusted earnings per share.
EBITDA was $30.6 million for the third quarter of 2008, compared to ($7.4) million for the third quarter of 2007. This was calculated by adding to net income of $18.9 million for the third quarter of 2008, net interest expense and depreciation that in the aggregate amounted to $11.7 million for the third quarter of 2008. Adjusted EBITDA, excluding all non-cash items described below, was $26.4 million for the third quarter of 2008, compared to $11.0 million for the third quarter of 2007. Please see the table at the back of this release for a reconciliation of net income to EBITDA.
The Company operated an average of 11.6 vessels during the third quarter of 2008, earning an average time charter equivalent rate of $40,250 per day, compared to an average of 7.2 vessels during the third quarter of 2007, earning an average time charter equivalent rate of $27,494 per day. Adjusted to exclude the effect of the amortization of below market acquired time charters, the time charter equivalent rate for the third quarter of 2008 was $34,205, compared to $24,616 for the third quarter of 2007.
Total adjusted operating expenses for the third quarter of 2008 were $8.6 million, or approximately $8,017 per day, including vessel operating expenses, management fees, general and administrative expenses and dry-docking costs, but excluding $0.1 million of share-based compensation for the period. For the third quarter of 2007, total adjusted operating expenses were $5.4 million, or approximately $8,132 per day, including vessel operating expenses, management fees and general and administrative expenses, but excluding $19.8 million of share-based compensation.
Third Quarter 2008 Non-cash Items
The Company's results for the three months ended September 30, 2008 included the following non-cash items:
* Non-cash revenue of $6.2 million and depreciation expense of ($0.7) million associated with below market time charters attached to vessels acquired, which are amortized over the remaining period of the time charter as increases to net revenue and depreciation expense. These non-cash items contributed an aggregate of $5.5 million to net income, or $0.20 to basic and diluted earnings per share, for the three months ended September 30, 2008. * An unrealized loss from interest rate swaps of ($1.1) million, or ($0.04) per basic and diluted share, for the three months ended September 30, 2008. * Non-cash expenses of ($0.1) million, or ($0.01) per basic and diluted share, relating to the amortization for the three months ended September 30, 2008, of the compensation cost recognized for a total of 107,875 restricted common shares issued to executive officers, directors and employees.
In the aggregate, these non-cash items contributed $4.3 million to net income, or $0.16 to earnings per basic and diluted share, for the three months ended September 30, 2008.
Dividend Declared
Based on the financial results for the third quarter of 2008, on November 12, 2008 the Company's Board of Directors declared a quarterly dividend of $0.50 per share, payable on November 27, 2008, to shareholders of record as of November 17, 2008.
Time Charter Coverage Update
Pursuant to its time chartering strategy, Paragon Shipping charters vessels for periods ranging from one to five years. Paragon has fixed 100%, 85% and 55% of its available fleet days in 2008, 2009 and 2010, respectively.
Cash Flows
For the nine months ended September 30, 2008, the Company generated net cash from operating activities of $60.6 million, compared to $26.6 million in the nine months ended September 30, 2007. For the nine months ended September 30, 2008, net cash used in investing activities was $78.1 million and cash from financing activities was $51.1 million. For the nine months ended September 30, 2007, net cash used in investing activities was $246.1 million and cash from financing activities was $204.2 million.
Nine months ended September 30, 2008 Financial Results:
Time charter revenue for the nine months ended September 30, 2008 was $124.7 million, compared to $46.3 million for the nine months ended September 30, 2007. The Company reported net income of $59.3 million, or $2.22 and $2.19 per basic and diluted share, respectively, for the nine months ended September 30, 2008, calculated on 26,746,695 weighted average number of basic shares, and on 27,040,928 weighted average number of diluted shares, outstanding for the period and reflecting the impact of the non-cash items discussed below. For the nine months ended September 30, 2007, the Company reported a net loss of ($2.8) million, or ($0.43) per basic and diluted share, calculated on 13,517,590 weighted average number of basic and diluted shares.
Excluding all non-cash items described below, adjusted net income for the nine months ended September 30, 2008, was $42.2 million, or $1.58 and $1.56 per basic and diluted share, respectively. This compares to adjusted net income of $15.1 million, or $1.12 per basic and diluted share for the nine months ended September 30, 2007.
EBITDA was $93.4 million for the nine months ended September 30, 2008, compared to $13.5 million for the nine months ended September 30, 2007. This was calculated by adding to net income of $59.3 million for the nine months ended September 30, 2008, net interest expense and depreciation that in the aggregate amounted to $34.1 million for the nine months ended September 30, 2008. Adjusted EBITDA, excluding all non-cash items described below, was $76.4 million for the nine months ended September 30, 2008, compared to $31.5 million for the nine months ended September 30, 2007.
The Company operated an average of 11.2 vessels during the nine months ended September 30, 2008, earning an average time charter equivalent rate of $39,468 per day, compared to an average of 6.3 vessels during the nine months ended September 30, 2007, earning an average time charter equivalent rate of $25,384 per day. Adjusted to exclude the effect of the amortization of below market acquired time charters, the time charter equivalent rate for the nine months ended September 30, 2008 was $32,382, compared to $24,069 for the nine months ended September 30, 2007.
Total adjusted operating expenses for the nine months ended September 30, 2008, were $22.5 million, or approximately $7,314 per day, including vessel operating expenses, management fees, general and administrative expenses and dry-docking costs, but excluding $0.4 million of share-based compensation. For the nine months ended September 30, 2007, total adjusted operating expenses were $10.8 million, or approximately $6,261 per day, including vessel operating expenses, management fees and general and administrative expenses, but excluding $19.9 million of share-based compensation.
Nine months ended September 30, 2008 Non-cash Items:
The Company's results for the nine months ended September 30, 2008 included the following non-cash items:
* Non-cash revenue of $21.3 million and depreciation expense of ($2.1) million associated with below market time charters attached to vessels acquired, which are amortized over the remaining period of the time charter as increases to net revenue and depreciation expense. These non-cash items contributed an aggregate of $19.2 million to net income, or $0.72 and $0.71 to basic and diluted earnings per share, respectively, for the nine months ended September 30, 2008. * An unrealized loss from interest rate swaps of ($1.8) million, or ($0.07) and ($0.06) per basic and diluted share, respectively, for the nine months ended September 30, 2008. * Non-cash expenses of ($0.4) million, or ($0.01) per basic and diluted share, relating to the amortization for the nine months ended September 30, 2008, of the compensation cost recognized for a total of 107,875 restricted common shares issued to executive officers, directors and employees.
In the aggregate, these non-cash items contributed $17.0 million to net income or $0.64 and $0.63 to earnings per basic and diluted share, respectively, for the nine months ended September 30, 2008.
Conference Call and Webcast:
The Company's management will host a conference call to discuss the results on Thursday, November 13, 2008 at 9:00 a.m. Eastern Time.
Conference Call details:
Participants should dial into the call 10 minutes before the scheduled time using the following numbers: + 1 866 288 9315 (from the U.S.), + 44 (0) 800 3769 250 (from the UK), or + 30 211 180 2000 (all other callers). The access code for the call is "909".
A telephonic replay of the conference call will be available for 90 days by dialing + 1 866 288 9317 (from the U.S.), + 44 (0) 800 901 2906 (from the UK), or + 30 210 94 60 929 (all other callers). The access code for the replay is "909#".
Slides and audio webcast:
There will also be a live webcast of the conference call and accompanying slide presentation on the Paragon Shipping Inc. website (www.paragonship.com). Please allow 15 minutes prior to the call to visit the site and download and install any necessary audio software. The webcast will be archived on this site for one year.
About Paragon Shipping Inc.
Paragon Shipping Inc. is an Athens, Greece-based international shipping company specializing in the transportation of drybulk cargoes. The Company's current fleet consists of twelve vessels with a total carrying capacity of 765,137 dwt. For further information, please visit the Company's website at www.paragonship.com.
Cautionary Statement Regarding Forward-Looking Statement
Matters discussed in this press release may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.
The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words "believe," "anticipate," "intends," "estimate," "forecast," "project," "plan," "potential," "will," "may," "should," "expect," "pending" and similar expressions identify forward-looking statements.
The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, our management's examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe 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, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.
In addition to these important factors, other 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 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, 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. Please see our filings with the Securities and Exchange Commission for a more complete discussion of these and other risks and uncertainties.
Updated Fleet List:
The following table represents our fleet as of November 12, 2008.
---------------------------------------------------------------------
Name Type Dwt Year Built
---------------------------------------------------------------------
Panamax
-------
---------------------------------------------------------------------
Deep Seas Panamax 72,891 1999
---------------------------------------------------------------------
Calm Seas Panamax 74,047 1999
---------------------------------------------------------------------
Kind Seas Panamax 72,493 1999
---------------------------------------------------------------------
Pearl Seas Panamax 74,483 2006
---------------------------------------------------------------------
Diamond Seas Panamax 74,274 2001
---------------------------------------------------------------------
Coral Seas Panamax 74,477 2006
---------------------------------------------------------------------
Golden Seas Panamax 74,475 2006
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Total Panamax 7 517,140
---------------------------------------------------------------------
Handymax
--------
---------------------------------------------------------------------
Blue Seas Handymax 45,654 1995
---------------------------------------------------------------------
Clean Seas Handymax 46,640 1995
---------------------------------------------------------------------
Crystal Seas Handymax 43,222 1995
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Total Handymax 3 135,516
---------------------------------------------------------------------
Supramax
---------------------------------------------------------------------
Sapphire Seas Supramax 53,702 2005
---------------------------------------------------------------------
Friendly Seas Supramax 58,779 2008
---------------------------------------------------------------------
Total Supramax 2 112,481
---------------------------------------------------------------------
Grand Total 12 765,137
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Summary Fleet Data:
---------------------------------------------------------------------
Third Quarter Ended Third Quarter Ended
September 30, 2007 September 30, 2008
---------------------------------------------------------------------
FLEET DATA
---------------------------------------------------------------------
Average number of vessels(1) 7.18 11.6
---------------------------------------------------------------------
Available days for fleet(2) 661 1,023
---------------------------------------------------------------------
Calendar days for fleet(3) 661 1,069
---------------------------------------------------------------------
Fleet utilization(4) 100% 96%
---------------------------------------------------------------------
---------------------------------------------------------------------
AVERAGE DAILY RESULTS
---------------------------------------------------------------------
Time charter equivalent(5) 27,494 40,250
---------------------------------------------------------------------
Time charter equivalent
Adjusted(5) 24,616 34,205
---------------------------------------------------------------------
Vessel operating expenses(6) 4,361 4,874
---------------------------------------------------------------------
Dry-docking expenses(7) 1,223
---------------------------------------------------------------------
Management fees(8) 687 875
---------------------------------------------------------------------
General and administrative
expenses(9) Adjusted 3,084 1,045
---------------------------------------------------------------------
Total vessel operating
expenses(10) Adjusted 8,132 8,017
---------------------------------------------------------------------
Nine Months Ended Nine Months Ended
September 30, 2007 September 30, 2008
---------------------------------------------------------------------
FLEET DATA
---------------------------------------------------------------------
Average number of vessels(1) 6.34 11.2
---------------------------------------------------------------------
Available days for fleet(2) 1,731 2,999
---------------------------------------------------------------------
Calendar days for fleet(3) 1,731 3,071
---------------------------------------------------------------------
Fleet utilization(4) 100% 98%
---------------------------------------------------------------------
---------------------------------------------------------------------
AVERAGE DAILY RESULTS
---------------------------------------------------------------------
Time charter equivalent(5) 25,384 39,468
---------------------------------------------------------------------
Time charter equivalent
Adjusted(5) 24,069 32,382
---------------------------------------------------------------------
Vessel operating expenses(6) 3,727 4,614
---------------------------------------------------------------------
Dry-docking expenses(7) 628
---------------------------------------------------------------------
Management fees(8) 683 857
---------------------------------------------------------------------
General and administrative
expenses(9) Adjusted 1,851 1,215
---------------------------------------------------------------------
Total vessel operating
expenses(10) Adjusted 6,261 7,314
---------------------------------------------------------------------
(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 calendar
days in the period.
(2) Available days for the fleet are the total calendar days the
vessels were in our possession for the relevant period after
subtracting for off hire days with major repairs, dry-docks or
special or intermediate surveys.
(3) Calendar days are the total days we possessed the vessels in our
fleet for the relevant period including off hire days associated
with major repairs, dry-dockings or special or intermediate
surveys.
(4) Fleet utilization is the percentage of time that our vessels
were available for revenue generating available days and is
determined by dividing available days by fleet calendar days for
the relevant period.
(5) Time charter equivalent or 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 revenue generated from
charters net of voyage expenses by available days for the
relevant time period. Voyage expenses primarily consist of port,
canal and fuel costs that are unique to a particular voyage, as
well as commissions. TCE is a 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.
For the time charter equivalent adjusted, other non-cash items
relating to the below market time charters attached to vessels
acquired which are amortized over the remaining period of the
time charter as an increase to net revenue have been excluded.
The Company excluded amortization of below market acquired time
charters because the Company believes that these non-cash items
do not reflect fairly the fleet operational results.
(6) 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.
(7) Daily dry-docking expenses is calculated by dividing dry-docking
expenses by fleet calendar days for the relevant time period.
(8) Daily management fees is calculated by dividing management fees
by fleet calendar days for the relevant time period.
(9) Daily general and administrative expenses is calculated by
dividing general and administrative expense by fleet calendar
days for the relevant time period. Non-cash expenses relating to
the amortization of the share based compensation cost for
options and restricted shares have been excluded.
(10) Total vessel operating expenses, or 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 is calculated by dividing TVOE by fleet calendar days for
the relevant time period. Non-cash expenses relating to the
amortization of the share based compensation cost for options
and restricted shares have been excluded.
Time Charter Equivalents Reconciliation
(Expressed in United States Dollars)
---------------------------------------------------------------------
Third Quarter Ended Third Quarter Ended
September 30, 2007 September 30, 2008
---------------------------------------------------------------------
Time Charter Revenues 19,048,552 43,574,890
---------------------------------------------------------------------
Less Voyage Expenses (34,970) (274,255)
---------------------------------------------------------------------
Less Commission (839,933) (2,125,012)
---------------------------------------------------------------------
Total Revenue, net of voyage
expenses 18,173,649 41,175,623
---------------------------------------------------------------------
Total available days 661 1,023
---------------------------------------------------------------------
Time Charter Equivalent 27,494 40,250
---------------------------------------------------------------------
Time Charter Equivalent
Adjusted Reconciliation
---------------------------------------------------------------------
Time Charter Revenues 19,048,552 43,574,890
---------------------------------------------------------------------
Less Voyage Expenses (34,970) (274,255)
---------------------------------------------------------------------
Less Commission (839,933) (2,125,012)
---------------------------------------------------------------------
Total Revenue, net of voyage
expenses 18,173,649 41,175,623
---------------------------------------------------------------------
Less Amortization of Below
Market Acquired Time Charters (1,902,629) (6,184,016)
---------------------------------------------------------------------
Total Revenue, net of voyage
expenses Adjusted 16,271,020 34,991,607
---------------------------------------------------------------------
Total available days 661 1,023
---------------------------------------------------------------------
Time Charter Equivalent
Adjusted 24,616 34,205
---------------------------------------------------------------------
---------------------------------------------------------------------
Nine Months Ended Nine Months Ended
September 30, 2007 September 30, 2008
---------------------------------------------------------------------
Time Charter Revenues 46,277,491 124,650,438
---------------------------------------------------------------------
Less Voyage Expenses (123,623) (473,828)
---------------------------------------------------------------------
Less Commission (2,214,984) (5,813,369)
---------------------------------------------------------------------
Total Revenue, net of voyage
expenses 43,938,884 118,363,241
---------------------------------------------------------------------
Total available days 1,731 2,999
---------------------------------------------------------------------
Time Charter Equivalent 25,384 39,468
---------------------------------------------------------------------
Time Charter Equivalent
Adjusted Reconciliation
---------------------------------------------------------------------
Time Charter Revenues 46,277,491 124,650,438
---------------------------------------------------------------------
Less Voyage Expenses (123,623) (473,828)
---------------------------------------------------------------------
Less Commission (2,214,984) (5,813,369)
---------------------------------------------------------------------
Total Revenue, net of voyage
expenses 43,938,884 118,363,241
---------------------------------------------------------------------
Less Amortization of Below
Market Acquired Time Charters (2,276,129) (21,251,002)
---------------------------------------------------------------------
Total Revenue, net of voyage
expenses Adjusted 41,662,755 97,112,239
---------------------------------------------------------------------
Total available days 1,731 2,999
---------------------------------------------------------------------
Time Charter Equivalent
Adjusted 24,069 32,382
---------------------------------------------------------------------
PARAGON SHIPPING INC.
Condensed Statement of Cash Flows
(Expressed in United States Dollars)
---------------------------------------------------------------------
Nine Months Ended Nine Months Ended
September 30, 2007 September 30, 2008
---------------------------------------------------------------------
Cash and cash equivalents,
beginning of year 32,331,848 31,328,637
---------------------------------------------------------------------
Provided by (used in):
---------------------------------------------------------------------
Operating Activities 26,621,686 60,565,925
---------------------------------------------------------------------
Investing Activities (246,143,035) (78,072,477)
---------------------------------------------------------------------
Financing Activities 204,217,503 51,111,348
---------------------------------------------------------------------
Net (decrease) / increase in
cash and cash equivalents (15,303,846) 33,604,796
---------------------------------------------------------------------
Cash and cash equivalents, end
of period 17,028,002 64,933,433
---------------------------------------------------------------------
EBITDA Reconciliation(1)
(Expressed in United States Dollars)
---------------------------------------------------------------------
Third Quarter Ended Third Quarter Ended
September 30, 2007 September 30, 2008
---------------------------------------------------------------------
Net (Loss) / Income (14,151,617) 18,898,519
---------------------------------------------------------------------
Plus Net Interest expense 2,540,611 3,308,372
---------------------------------------------------------------------
Plus Depreciation 4,225,723 8,435,141
---------------------------------------------------------------------
Plus Amortization -- --
---------------------------------------------------------------------
EBITDA (7,385,283) 30,642,032
---------------------------------------------------------------------
Adjusted EBITDA Reconciliation
---------------------------------------------------------------------
Net (Loss) / Income (14,151,617) 18,898,519
---------------------------------------------------------------------
Non-cash revenue and
depreciation due to below
market acquired time charters (1,745,805) (5,488,688)
---------------------------------------------------------------------
Unrealized loss from interest
rate swap 377,505 1,086,322
---------------------------------------------------------------------
Non-cash expenses from the
amortization of share based
compensation cost recognized 19,785,822 134,242
---------------------------------------------------------------------
Adjusted Net Income 4,265,905 14,630,395
---------------------------------------------------------------------
Plus Net Interest expense 2,540,611 3,308,372
---------------------------------------------------------------------
Plus Depreciation 4,225,723 8,435,141
---------------------------------------------------------------------
Plus Amortization -- --
---------------------------------------------------------------------
Adjusted EBITDA 11,032,239 26,373,908
---------------------------------------------------------------------
---------------------------------------------------------------------
Nine Months Ended Nine Months Ended
September 30, 2007 September 30, 2008
---------------------------------------------------------------------
Net (Loss) / Income (2,845,776) 59,274,339
---------------------------------------------------------------------
Plus Net Interest expense 5,707,944 9,998,874
---------------------------------------------------------------------
Plus Depreciation 10,610,725 24,132,272
---------------------------------------------------------------------
Plus Amortization -- --
---------------------------------------------------------------------
EBITDA 13,472,893 93,405,485
---------------------------------------------------------------------
Adjusted EBITDA Reconciliation
---------------------------------------------------------------------
Net (Loss) / Income (2,845,776) 59,274,339
---------------------------------------------------------------------
Non-cash revenue and
depreciation due to below
market acquired time charters (2,106,243) (19,179,151)
---------------------------------------------------------------------
Unrealized loss from interest
rate swap 224,575 1,749,212
---------------------------------------------------------------------
Non-cash expenses from the
amortization of share based
compensation cost recognized 19,870,657 388,421
---------------------------------------------------------------------
Adjusted Net Income 15,143,213 42,232,821
---------------------------------------------------------------------
Plus Net Interest expense 5,707,944 9,998,874
---------------------------------------------------------------------
Plus Depreciation 10,610,725 24,132,272
---------------------------------------------------------------------
Plus Amortization -- --
---------------------------------------------------------------------
Adjusted EBITDA 31,461,882 76,363,967
---------------------------------------------------------------------
(1) Paragon Shipping Inc. considers EBITDA to represent net income
plus net interest expense and depreciation and amortization. The
Company's management uses EBITDA as a performance measure. The
Company believes that EBITDA is useful to investors, because the
shipping industry is capital intensive and may involve
significant financing costs. EBITDA is not an item recognized by
GAAP and should not be considered as an alternative to net
income, operating income or any other indicator of a Company's
operating performance required by GAAP. The Company's definition
of EBITDA may not be the same as that used by other companies in
the shipping or other industries. The Company excluded non-cash
items to derive at the adjusted net income and the adjusted
EBITDA because the Company believes that the non-cash items do
not reflect fairly the fleet operational results.
Reconciliation of GAAP Financial Information to Non-GAAP Financial
Information
(Expressed in United States Dollars)
---------------------------------------------------------------------
GAAP Financial Information Third Quarter Ended Third Quarter Ended
September 30, 2007 September 30, 2008
---------------------------------------------------------------------
Net (Loss) / Income (14,151,617) 18,898,519
---------------------------------------------------------------------
Income allocable to Class B
common shares 2,954,848 --
---------------------------------------------------------------------
(Loss) / Income available to
Class A common shares (17,106,465) 18,898,519
---------------------------------------------------------------------
Weighted average number of
Class A common shares basic 17,491,591 27,034,270
---------------------------------------------------------------------
Weighted average number of
Class A common shares diluted 17,491,591 27,207,826
---------------------------------------------------------------------
(Loss) / Earnings per Class A
common shares basic (0.98) 0.70
---------------------------------------------------------------------
(Loss) / Earnings per Class A
common shares diluted (0.98) 0.69
---------------------------------------------------------------------
Reconciliation of Net (Loss) /
Income to Adjusted Net Income
---------------------------------------------------------------------
Net (Loss) / Income (14,151,617) 18,898,519
---------------------------------------------------------------------
Non-cash revenue and
depreciation due to below
market acquired time charters (1,745,805) (5,488,688)
---------------------------------------------------------------------
Unrealized loss from interest
rate swap 377,505 1,086,322
---------------------------------------------------------------------
Non-cash expenses from the
amortization of compensation
cost recognized 19,785,822 134,242
---------------------------------------------------------------------
Adjusted Net Income 4,265,905 14,630,395
---------------------------------------------------------------------
Weighted average number of
common shares basic 17,491,591 27,034,270
---------------------------------------------------------------------
Weighted average number of
common shares diluted 17,491,591 27,207,826
---------------------------------------------------------------------
Adjusted earnings per share
basic(1) 0.24 0.54
---------------------------------------------------------------------
Adjusted earnings per share
diluted(1) 0.24 0.54
---------------------------------------------------------------------
(1) Adjusted earnings per share is not an item recognized by GAAP and
should not be considered as an alternative to Earnings per share
or any other indicator of a Company's operating performance
required by GAAP. The Company excluded non-cash items to derive
at the adjusted net income and the adjusted earnings per share
basic and diluted because the Company believes that these
non-cash items do not reflect fairly the fleet operational
results.
Reconciliation of GAAP Financial Information to Non-GAAP Financial
Information
(Expressed in United States Dollars)
---------------------------------------------------------------------
GAAP Financial Information Nine Months Ended Nine Months Ended
September 30, 2007 September 30, 2008
---------------------------------------------------------------------
Net (Loss) / Income (2,845,776) 59,274,339
---------------------------------------------------------------------
Income allocable to Class B
common shares 2,954,848 --
---------------------------------------------------------------------
(Loss) / Income available to
Class A common shares (5,800,624) 59,274,339
---------------------------------------------------------------------
Weighted average number of
Class A common shares basic 13,517,590 26,746,695
---------------------------------------------------------------------
Weighted average number of
Class A common shares diluted 13,517,590 27,040,928
---------------------------------------------------------------------
(Loss) / Earnings per Class A
common shares basic (0.43) 2.22
---------------------------------------------------------------------
(Loss) / Earnings per Class A
common shares diluted (0.43) 2.19
---------------------------------------------------------------------
Reconciliation of Net (Loss) /
Income to Adjusted Net Income
---------------------------------------------------------------------
Net (Loss) / Income (2,845,776) 59,274,339
---------------------------------------------------------------------
Non-cash revenue and
depreciation due to below
market acquired time charters (2,106,243) (19,179,151)
---------------------------------------------------------------------
Unrealized loss from interest
rate swap 224,575 1,749,212
---------------------------------------------------------------------
Non-cash expenses from the
amortization of compensation
cost recognized 19,870,657 388,421
---------------------------------------------------------------------
Adjusted Net Income 15,143,213 42,232,821
---------------------------------------------------------------------
Weighted average number of
common shares basic 13,517,590 26,746,695
---------------------------------------------------------------------
Weighted average number of
common shares diluted 13,517,590 27,040,928
---------------------------------------------------------------------
Adjusted earnings per share
basic(1) 1.12 1.58
---------------------------------------------------------------------
Adjusted earnings per share
diluted(1) 1.12 1.56
---------------------------------------------------------------------
(1) Adjusted earnings per share is not an item recognized by GAAP and
should not be considered as an alternative to Earnings per share
or any other indicator of a Company's operating performance
required by GAAP. The Company excluded non-cash items to derive
at the adjusted net income and the adjusted earnings per share
basic and diluted because the Company believes that these
non-cash items do not reflect fairly the fleet operational
results.
Paragon Shipping Inc.
Unaudited Condensed Consolidated Balance Sheets
As of December 31, 2007 and September 30, 2008
(Expressed in United States Dollars)
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December 31, 2007 September 30, 2008
Assets
Current assets
Cash and cash equivalents 31,328,637 64,933,433
Trade receivables 354,154 342,135
Other receivables 287,546 367,188
Prepaid expenses 654,576 682,879
Due from management company -- 1,212,813
Inventories 801,373 905,372
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Total current assets 33,426,286 68,443,820
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Fixed assets
Advances for vessels acquisitions --
Vessels at cost 633,378,703 713,373,186
Less: accumulated depreciation (18,268,064) (42,400,336)
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Total fixed assets 615,110,639 670,972,850
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Other assets 1,584,950 1,852,981
Restricted cash 8,010,000 6,010,000
Above market acquired time
charters -- 64,724
Other long-term receivables 1,340,602 1,272,844
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Total Assets 659,472,477 748,617,219
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Liabilities and Shareholders' Equity
Current liabilities
Trade accounts payable (including
balance due to a related party
of $118,317 and $579,021 as of
December 31, 2007 and
September 30, 2008, respectively) 2,487,291 3,125,106
Accrued expenses 5,494,431 2,793,826
Due to management company 1,642,805 --
Interest rate swap -- 2,537,563
Deferred income 3,176,938 3,291,534
Current portion of long-term debt 9,000,000 22,900,000
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Total current liabilities 21,801,465 34,648,029
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Long-term debt 309,000,000 370,310,000
Other long-term payable 586,499 1,352,338
Interest rate swap 1,370,701 582,351
Below market acquired time
charters 51,077,602 29,813,329
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Total long-term liabilities 362,034,802 402,058,018
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Total Liabilities 383,836,267 436,706,047
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Commitments and Contingencies
Shareholders' equity
Preferred shares, $0.001 par
value; 25,000,000 authorized,
none issued, none outstanding at
December 31, 2007 and
September 30, 2008 -- --
Class A common shares, $0.001 par
value; 120,000,000 authorized
25,744,983 issued and outstanding
at December 31, 2007 and
27,138,515 issued and outstanding
at September 30, 2008 25,745 27,139
Class B common shares, $0.001 par
value; 5,000,000 authorized, none
issued and outstanding at
December 31, 2007 and
September 30, 2008 -- --
Additional paid-in capital 304,408,972 318,381,249
Accumulated deficit (28,798,507) (6,497,216)
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Total shareholders' equity 275,636,210 311,911,172
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Total Liabilities and
Shareholders' Equity 659,472,477 748,617,219
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Paragon Shipping Inc.
Unaudited Consolidated Statement of Operations
For the three months ended September 30, 2007 and September 30, 2008
(Expressed in United States Dollars)
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Three Months Ended Three Months Ended
September 30, 2007 September 30, 2008
Revenue
Time charter revenue
(including amortization of
below and above market
acquired time charters of
$1,902,629 and $6,184,016
for the three months ended
September 30, 2007 and
2008, respectively) 19,048,552 43,574,890
Less: commissions 839,933 2,125,012
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Net Revenue 18,208,619 41,449,878
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Expenses
Voyage expenses 34,970 274,255
Vessels operating expenses
(including expenses charged
by a related party of
$23,172 and $26,378 for the
three months ended
September 30, 2007 and 2008,
respectively) 2,882,858 5,210,547
Dry-docking expenses -- 1,306,883
Management fees charged by a
related party 453,960 935,132
Depreciation 4,225,723 8,435,141
General and administrative
expenses (including share
based compensation of
$19,785,822 for the three
months ended September 30,
2007 and $134,242 for the
three months ended
September 30, 2008 21,824,575 1,252,097
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Operating Income (11,213,467) 24,035,823
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Other Income (Expenses)
Interest and finance costs (2,802,743) (3,773,281)
Loss on interest rate swap (377,505) (1,531,804)
Interest income 262,132 464,909
Other expense (371,250)
Foreign currency (losses) /
income (20,034) 74,122
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Total Other Expenses, net (2,938,150) (5,137,304)
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Net (Loss) / Income (14,151,617) 18,898,519
Income allocable to Class B
common shares 2,954,848 --
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(Loss) / Income available to
Class A common shares (17,106,465) 18,898,519
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(Loss) / Earnings per Class
A common share, basic ($0.98) $ 0.70
(Loss) / Earnings per Class A
common share, diluted ($0.98) $ 0.69
Weighted average number of
Class A common shares, basic 17,491,591 27,034,270
Weighted average number of
Class A common shares,
diluted 17,491,591 27,207,826
Paragon Shipping Inc.
Unaudited Condensed Consolidated Statement of Operations
For the nine months ended September 30, 2007 and September 30, 2008
(Expressed in United States Dollars)
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Nine Months Ended Nine Months Ended
September 30, 2007 September 30, 2008
Revenue
Time charter revenue
(including amortization of
below and above market
acquired time charters of
$2,276,129 and $21,251,002
for the nine months ended
September 30, 2007 and
2008, respectively) 46,277,491 124,650,438
Less: commissions 2,214,984 5,813,369
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Net Revenue 44,062,507 118,837,069
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Expenses
Voyage expenses 123,623 473,828
Vessels operating expenses
(including expenses
charged by a related party
of $63,132 and $91,243 for
the nine months ended
September 30, 2007 and
2008, respectively) 6,452,040 14,170,258
Dry-docking expenses -- 1,929,341
Management fees charged by
a related party 1,180,703 2,631,727
Depreciation 10,610,725 24,132,272
General and administrative
expenses (including share
based compensation of
$19,870,657 for the nine
months ended September 30,
2007 and $388,421 for the
nine months ended
September 30, 2008 23,075,715 4,118,067
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Operating Income 2,619,701 71,381,576
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Other Income (Expenses)
Interest and finance costs (6,310,859) (11,344,411)
Loss on interest rate swap. (224,575) (2,608,766)
Interest income 602,915 1,345,537
Other income -- 541,101
Gain from the change in
fair value of warrants 493,962 --
Foreign currency losses (26,920) (40,698)
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Total Other Expenses, net (5,465,477) (12,107,237)
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Net (Loss) / Income (2,845,776) 59,274,339
Income allocable to Class B
common shares 2,954,848 --
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(Loss) / Income available
to Class A common shares (5,800,624) 59,274,339
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(Loss) / Earnings per Class
A common share, basic ($0.43) $ 2.22
(Loss) / Earnings per Class
A common share, diluted ($0.43) $ 2.19
Weighted average number of
Class A common shares,
basic 13,517,590 26,746,695
Weighted average number of
Class A common shares,
diluted 13,517,590 27,040,928
Paragon Shipping Inc.
Unaudited Consolidated Statement of Shareholders' Equity
For the nine months ended September 30, 2008
(Expressed in United States Dollars)
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Class A Shares
-------------------
Additional
Number of Par Paid-in Accumulated
Shares Value Capital deficit Total
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Balance
January
1, 2008 25,744,983 25,745 304,408,972 (28,798,507) 275,636,210
Issuance
of Class
A common
shares,
from the
exercise
of
warrants
and
options 1,369,532 1,370 13,583,880 13,585,250
Share
based
compensa-
tion 388,421 388,421
Issuance
of
restrict-
ed Class
A common
shares 30,000 30 (30) --
Cancella-
tion of
restrict-
ed Class
A
common
shares (6,000) (6) 6 --
Dividends
paid (36,973,048) (36,973,048)
Net
Income 59,274,339 59,274,339
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Balance
September
30, 2008 27,138,515 27,139 318,381,249 (6,497,216) 311,911,172
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Paragon Shipping Inc.
Unaudited Condensed Consolidated Statement of Cash Flows
For the nine months ended September 30, 2007 and September 30, 2008
(Expressed in United States Dollars)
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Nine Months Ended Nine Months Ended
September 30, 2007 September 30, 2008
Cash Flows from Operating
Activities
Net (Loss) / Income (2,845,776) 59,274,339
Adjustments to reconcile
net income to net cash
provided by operating
activities
Depreciation 10,610,725 24,132,272
Amortization of below and
above market acquired time
charters (2,276,129) (21,251,002)
Amortization of financing
costs 495,932 442,823
Share based compensation 19,870,657 388,421
Unrealized loss on interest
rate swap 224,575 1,749,212
Gain from the change in fair
value of warrants (493,962) --
Changes in assets and
liabilities
(Increase) / decrease in trade
receivables (354,566) 12,019
Decrease / (increase) in other
receivables 753,494 (79,642)
Increase in prepaid expenses (240,247) (28,303)
Increase in inventories (445,429) (103,999)
Decrease in other assets 1,505 --
Increase in due from
management company (246,858) (1,212,813)
(Increase) / decrease in
other long term receivables (454,979) 67,758
Increase in trade accounts
payable 1,893,241 637,815
Increase / (decrease) in
accrued expenses 594,526 (2,700,605)
Decrease in due to management
company (1,741,872) (1,642,805)
Increase in deferred income 1,276,849 114,596
Increase in other long-term
payable -- 765,839
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Net cash from operating
activities 26,621,686 60,565,925
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Cash flow from / (used in)
investing activities
Acquisition of vessels and
capital expenditures (238,633,035) (80,072,477)
Restricted cash (7,510,000) 2,000,000
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Net cash used in investing
activities (246,143,035) (78,072,477)
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Cash flows from / (used in)
financing activities
Proceeds from long-term debt 30,812,500 111,500,000
Proceeds from short-term debt 289,336,091 --
Repayment of short-term debt (150,000,000) --
Repayment of long-term debt (108,250,000) (36,290,000)
Payment of financing costs (1,204,547) (710,854)
Proceeds from the issuance of
Class A common shares 175,960,710 --
Class A common shares
offering costs (12,464,359) --
Proceeds from the issuance of
Class A common shares from
the exercise of warrants and
options -- 13,585,250
Dividends paid (19,972,892) (36,973,048)
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Net cash from financing
activities 204,217,503 51,111,348
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Net (decrease) / increase in
cash and cash equivalents (15,303,846) 33,604,796
Cash and cash equivalents at
the beginning of the period 32,331,848 31,328,637
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Cash and cash equivalents at
the end of the period 17,028,002 64,933,433
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Supplemental disclosure of
cash flow information
Cash paid during the period
for interest 5,182,772 10,517,761