Time Charter Revenue Increases to $40.6 Million
GAAP Diluted EPS of $0.91 vs. $0.41 in Prior Year; Adjusted
Diluted EPS of $0.49 vs. $0.45
ATHENS, Greece, Aug. 6, 2008 (PRIME NEWSWIRE) -- Paragon Shipping Inc. (Nasdaq:PRGN), a global shipping transportation company specializing in drybulk cargoes, announced today its results for the three and six months ended June 30, 2008.
Commenting on the results, Michael Bodouroglou, Chairman and Chief Executive Officer of Paragon Shipping, stated, "We are pleased with our performance in the second quarter which resulted in record quarterly net income. Our results demonstrate the benefits of our fleet expansion efforts as we have nearly doubled our operating fleet during the past year. This growth, together with the successful time charter fixtures we have completed over the past few months, allowed us to increase our quarterly dividend by 14.3% this quarter as compared to the first quarter of 2008."
Mr. Bodouroglou concluded, "We have also further expanded our fleet with the delivery of the Friendly Seas, a 2008 Supramax. This latest vessel acquisition is a prime example of our proven track record of growing the Company through the acquisition of modern, second hand vessels with attractive time charters attached. In the coming months we will continue to execute on this strategy as we look to further grow our fleet and earnings."
Second Quarter 2008 Financial Results:
Time charter revenue for the second quarter of 2008 was $40.6 million compared to $13.7 million for the second quarter of 2007. The Company reported net income of $24.6 million, or $0.91 per basic and diluted share, for the second quarter of 2008, calculated on 26,927,648 weighted average number of basic shares, and on 27,155,816 weighted average number of diluted shares, outstanding for the period and reflecting the impact of the non-cash items discussed below. For the second quarter of 2007 net income was $5.5 million, or $0.41 per basic and diluted share, calculated on 11,497,656 and 11,506,757 weighted average number of basic and diluted shares, respectively.
Excluding all non-cash items described below, adjusted net income for the second quarter of 2008 was $13.4 million, or $0.50 and 0.49 per basic and diluted share, respectively. This compares to adjusted net income of $5.2 million, or $0.46 and $0.45 per basic and diluted share, respectively, for the second quarter of 2007. Please refer to the table at the back of this press release for a reconciliation of GAAP earnings per share to non-GAAP adjusted earnings per share.
EBITDA was $35.6 million for the second quarter of 2008, compared to $10.4 million for the second quarter of 2007. This was calculated by adding to net income of $24.6 million for the second quarter of 2008, net interest expense and depreciation that in the aggregate amounted to $11.0 million for the second quarter of 2008. Adjusted EBITDA excluding all non-cash items described below was $24.4 million for the second quarter of 2008, compared to $10.1 million for the second 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 vessels during the second quarter of 2008, earning an average time charter equivalent rate of $39,027 per day, compared to an average of 6 vessels during the second quarter of 2007, earning an average time charter equivalent rate of $23,678 per day. Adjusted to exclude the effect of the amortization of below market acquired time charters, the time charter equivalent rate for the second quarter of 2008 was $31,394, compared to $23,555 for the second quarter of 2007.
Total adjusted operating expenses for the second quarter of 2008 were $7.8 million, or approximately $7,764 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 second quarter of 2007, total adjusted operating expenses were $2.9 million, or approximately $5,305 per day, including vessel operating expenses, management fees and general and administrative expenses, but excluding $0.04 million of share-based compensation.
Second Quarter 2008 Non-cash Items
The Company's results for the three months ended June 30, 2008 included the following non-cash items:
-- Non-cash revenue of $7.5 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 $6.8
million to net income, or $0.25 to basic and diluted earnings per
share, for the three months ended June 30, 2008.
-- An unrealized profit from interest rate swaps of $4.5 million, or
$0.17 per basic and diluted share, for the three months ended June
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 June 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 $11.2 million to net income, or $0.42 and $0.41 to earnings per basic and diluted share, respectively, for the three months ended June 30, 2008.
Dividend Declared
As previously announced, based on the financial results for the second quarter of 2008, on August 1, 2008 the Company's Board of Directors declared a quarterly dividend of $0.50 per share, payable on August 28, 2008 to shareholders of record as of August 18, 2008. This represents an increase of approximately 14.3% over the Company's previous quarterly dividend of $0.4375 per share.
Recent Fleet Developments
On August 5, 2008 the Company took delivery of its twelfth vessel, the Friendly Seas, a 58,779 dwt 2008-built Supramax vessel. The Friendly Seas has been chartered to Irika Shipping pursuant to a time charter with a remaining period of approximately 10 to 12 months at a rate of $55,000 per day. Irika Shipping, in turn, has chartered the vessel to Cargill on identical terms. Immediately following the expiration of this charter, the vessel has been fixed to Dieulemar at $33,750 per day for a period of 58 to 62 months.
Time Charter Coverage Update
Pursuant to its time chartering strategy, Paragon Shipping charters vessels for periods ranging from one to five years. With the delivery of Friendly Seas Paragon has fixed 100%, 85% and 55% of its available fleet days in 2008, 2009 and 2010, respectively.
Cash Flows
For the six months ended June 30, 2008, the Company generated net cash from operating activities of $39.4 million compared to $15.7 million in the six months ended June 30, 2007. For the six months ended June 30, 2008 net cash from investing activities was $5.4 million and cash used in financing activities was $16.5 million. For the six months ended June 30, 2007 net cash used in investing activities was $58.9 million and cash from financing activities was $25.7 million.
Six months ended June 30, 2008 Financial Results:
Time charter revenue for the six months ended June 30, 2008 was $81.1 million compared to $27.2 million for the six months ended June 30, 2007. The Company reported net income of $40.4 million, or $1.52 and $1.50 per basic and diluted share, respectively, for the six months ended June 30, 2008, calculated on 26,601,327 weighted average number of basic shares, and on 26,961,407 weighted average number of diluted shares, outstanding for the period and reflecting the impact of the non-cash items discussed below. For the six months ended June 30, 2007 net income was $11.3 million, or $0.84 per basic and diluted share, calculated on 11,497,656 and 11,506,757 weighted average number of basic and diluted shares, respectively.
Excluding all non-cash items described below, adjusted net income for the six months ended June 30, 2008 was $27.6 million, or $1.04 and $1.02 per basic and diluted share, respectively. This compares to adjusted net income of $10.9 million, or $0.95 per basic and diluted share for the six months ended June 30, 2007.
EBITDA was $62.8 million for the six months ended June 30, 2008, compared to $20.9 million for the six months ended June 30, 2007. This was calculated by adding to net income of $40.4 million for the six months ended June 30, 2008, net interest expense and depreciation that in the aggregate amounted to $22.4 million for the six months ended June 30, 2008. Adjusted EBITDA excluding all non-cash items described below was $50.0 million for the six months ended June 30, 2008, compared to $20.4 million for the six months ended June 30, 2007.
The Company operated an average of 11 vessels during the six months ended June 30, 2008, earning an average time charter equivalent rate of $39,063 per day, compared to an average of 5.91 vessels during the six months ended June 30, 2007, earning an average time charter equivalent rate of $24,080 per day. Adjusted to exclude the effect of the amortization of below market acquired time charters, the time charter equivalent rate for the six months ended June 30, 2008 was $31,438, compared to $23,731 for the six months ended June 30, 2007.
Total adjusted operating expenses for the six months ended June 30, 2008 were $13.9 million, or approximately $6,938 per day, including vessel operating expenses, management fees, general and administrative expenses and dry-docking costs, but excluding $0.3 million of share-based compensation. For the six months ended June 30, 2007, total adjusted operating expenses were $5.5 million, or approximately $5,105 per day, including vessel operating expenses, management fees and general and administrative expenses, but excluding $0.1 million of share-based compensation.
First Half 2008 Non-cash Items
The Company's results for the six months ended June 30, 2008 included the following non-cash items:
-- Non-cash revenue of $15.1 million and depreciation expense of
($1.4) 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 $13.7
million to net income, or $0.51 to basic and diluted earnings per
share for the six months ended June 30, 2008.
-- An unrealized loss from interest rate swaps of ($0.7) million, or
($0.02) per basic and diluted share, for the six months ended June
30, 2008.
-- Non-cash expenses of ($0.3) million, or ($0.01) per basic and
diluted share, relating to the amortization for the six months
ended June 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 $12.7 million to net income, or $0.48 and $0.47 to earnings per basic and diluted share, respectively, for the six months ended June 30, 2008.
Conference Call and Webcast:
The Company's management will host a conference call to discuss the results on Thursday, August 7, 2008 at 9:30 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 US), + 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 US), + 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 August 6, 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 ------------------------------------------------------------ Total Panamax 7 517,140 ------------------------------------------------------------ Handymax -------- ------------------------------------------------------------ Blue Seas Handymax 45,654 1995 ------------------------------------------------------------ Clean Seas Handymax 46,640 1995 ------------------------------------------------------------ Crystal Seas Handymax 43,222 1995 ------------------------------------------------------------ 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 ------------------------------------------------------------
Summary Fleet Data:
-----------------------------------------------------------------
Second Quarter Second Quarter Ended
Ended June 30, 2007 June 30, 2008
-----------------------------------------------------------------
FLEET DATA
-----------------------------------------------------------------
Average number of
vessels (1) 6 11
-----------------------------------------------------------------
Available days for
fleet (2) 546 987
-----------------------------------------------------------------
Calendar days for
fleet (3) 546 1,001
-----------------------------------------------------------------
Fleet utilization (4) 100% 99%
-----------------------------------------------------------------
AVERAGE DAILY RESULTS
-----------------------------------------------------------------
Time charter
equivalent (5) 23,678 39,027
-----------------------------------------------------------------
Time charter
equivalent Adjusted (5) 23,555 31,394
-----------------------------------------------------------------
Vessel operating
expenses (6) 3,412 4,859
-----------------------------------------------------------------
Dry-docking expenses (7) 509
------------------------------------------------------------------
Management fees (8) 684 931
-----------------------------------------------------------------
General and
administrative
expenses (9) Adjusted 1,209 1,465
-----------------------------------------------------------------
Total vessel operating
expenses (10) Adjusted 5,305 7,764
-----------------------------------------------------------------
-----------------------------------------------------------------
Six months ended Six months Ended
June 30, 2007 June 30, 2008
-----------------------------------------------------------------
FLEET DATA
-----------------------------------------------------------------
Average number of
vessels (1) 5.91 11
-----------------------------------------------------------------
Available days for
fleet (2) 1,070 1,976
-----------------------------------------------------------------
Calendar days for
fleet (3) 1,070 2,002
-----------------------------------------------------------------
Fleet utilization (4) 100% 99%
-----------------------------------------------------------------
-----------------------------------------------------------------
AVERAGE DAILY RESULTS
-----------------------------------------------------------------
Time charter
equivalent (5) 24,080 39,063
-----------------------------------------------------------------
Time charter equivalent
Adjusted (5) 23,731 31,438
-----------------------------------------------------------------
Vessel operating
expenses (6) 3,336 4,475
-----------------------------------------------------------------
Dry-docking expenses (7) 311
-----------------------------------------------------------------
Management fees (8) 679 847
-----------------------------------------------------------------
General and
administrative
expenses (9) Adjusted 1,090 1,305
-----------------------------------------------------------------
Total vessel
operating expenses
(10) Adjusted 5,105 6,938
-----------------------------------------------------------------
(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)
-----------------------------------------------------------------
Second Quarter Second Quarter
Ended June 30, Ended June 30,
2007 2008
-----------------------------------------------------------------
Time Charter Revenues 13,690,385 40,621,454
-----------------------------------------------------------------
Less Voyage Expenses (50,597) (147,676)
-----------------------------------------------------------------
Less Commission (711,502) (1,954,504)
-----------------------------------------------------------------
Total Revenue, net of voyage
expenses 12,928,286 38,519,274
-----------------------------------------------------------------
Total available days 546 987
-----------------------------------------------------------------
Time Charter Equivalent 23,678 39,027
-----------------------------------------------------------------
Time Charter Equivalent Adjusted
Reconciliation
-----------------------------------------------------------------
Time Charter Revenues 13,690,385 40,621,454
-----------------------------------------------------------------
Less Voyage Expenses (50,597) (147,676)
-----------------------------------------------------------------
Less Commission (711,502) (1,954,504)
-----------------------------------------------------------------
Total Revenue, net of voyage
expenses 12,928,286 38,519,274
-----------------------------------------------------------------
Less Amortization of
Below Market Acquired
Time Charters (67,500) (7,533,493)
-----------------------------------------------------------------
Total Revenue, net of
voyage expenses
Adjusted 12,860,786 30,985,781
-----------------------------------------------------------------
Total available days 546 987
-----------------------------------------------------------------
Time Charter
Equivalent Adjusted 23,555 31,394
-----------------------------------------------------------------
-----------------------------------------------------------------
Six months Six months
Ended June 30, Ended June 30,
2007 2008
-----------------------------------------------------------------
Time Charter Revenues 27,228,939 81,075,548
-----------------------------------------------------------------
Less Voyage Expenses (88,653) (199,573)
-----------------------------------------------------------------
Less Commission (1,375,051) (3,688,357)
-----------------------------------------------------------------
Total Revenue, net of voyage
expenses 25,765,235 77,187,618
-----------------------------------------------------------------
Total available days 1,070 1,976
-----------------------------------------------------------------
Time Charter Equivalent 24,080 39,063
-----------------------------------------------------------------
Time Charter Equivalent
Adjusted Reconciliation
-----------------------------------------------------------------
Time Charter Revenues 27,228,939 81,075,548
-----------------------------------------------------------------
Less Voyage Expenses (88,653) (199,573)
-----------------------------------------------------------------
Less Commission (1,375,051) (3,688,357)
-----------------------------------------------------------------
Total Revenue, net of voyage expense 25,765,235 77,187,618
-----------------------------------------------------------------
Less Amortization of Below Market
Acquired Time Charters (373,500) (15,066,986)
-----------------------------------------------------------------
Total Revenue, net of voyage
expenses Adjusted 25,391,735 62,120,632
-----------------------------------------------------------------
Total available days 1,070 1,976
-----------------------------------------------------------------
Time Charter Equivalent Adjusted 23,731 31,438
-----------------------------------------------------------------
PARAGON SHIPPING INC.
Condensed Statement of Cash Flows
(Expressed in United States Dollars)
------------------------------------------------------------------
Six months Six months
Ended June 30, Ended June 30,
2007 2008
------------------------------------------------------------------
Cash and cash equivalents,
beginning of year 32,331,848 31,328,637
------------------------------------------------------------------
Provided by (used in):
------------------------------------------------------------------
Operating Activities 15,686,181 39,407,185
------------------------------------------------------------------
Investing Activities (58,872,193) (5,425,000)
------------------------------------------------------------------
Financing Activities 25,656,305 16,488,421
------------------------------------------------------------------
Net (decrease) / increase in cash
and cash equivalents (17,529,707) 50,470,606
------------------------------------------------------------------
Cash and cash equivalents, end of
period 14,802,141 81,799,243
------------------------------------------------------------------
EBITDA Reconciliation (1)
(Expressed in United States Dollars)
-----------------------------------------------------------------
Second Quarter Second Quarter
Ended June 30, Ended June 30,
2007 2008
-----------------------------------------------------------------
Net Income 5,491,315 24,610,980
-----------------------------------------------------------------
Plus Net Interest expense 1,602,930 3,161,910
-----------------------------------------------------------------
Plus Depreciation 3,255,806 7,848,565
-----------------------------------------------------------------
Plus Amortization -- --
-----------------------------------------------------------------
EBITDA 10,350,051 35,621,455
-----------------------------------------------------------------
Adjusted EBITDA Reconciliation
-----------------------------------------------------------------
Net Income 5,491,315 24,610,980
-----------------------------------------------------------------
Non-cash revenue and depreciation
due to below market acquired
time charters (60,709) (6,845,232)
-----------------------------------------------------------------
Unrealized profit from interest
rate swap (241,501) (4,519,893)
-----------------------------------------------------------------
Non-cash expenses from the
amortization of compensation
cost recognized for restricted
shares issued 42,652 119,764
-----------------------------------------------------------------
Adjusted Net Income 5,231,757 13,365,619
-----------------------------------------------------------------
Plus Net Interest expense 1,602,930 3,161,910
-----------------------------------------------------------------
Plus Depreciation 3,255,806 7,848,565
-----------------------------------------------------------------
Plus Amortization -- --
-----------------------------------------------------------------
Adjusted EBITDA 10,090,493 24,376,094
-----------------------------------------------------------------
-----------------------------------------------------------------
Six months Six months
Ended June 30, Ended June 30,
2007 2008
-----------------------------------------------------------------
Net Income 11,305,841 40,375,820
-----------------------------------------------------------------
Plus Net Interest expense 3,167,333 6,690,502
-----------------------------------------------------------------
Plus Depreciation 6,385,002 15,697,131
-----------------------------------------------------------------
Plus Amortization -- --
-----------------------------------------------------------------
EBITDA 20,858,176 62,763,453
-----------------------------------------------------------------
Adjusted EBITDA Reconciliation
-----------------------------------------------------------------
Net Income 11,305,841 40,375,820
-----------------------------------------------------------------
Non-cash revenue and depreciation
due to below market acquired
time charters (360,438) (13,690,463)
-----------------------------------------------------------------
Unrealized (profit) / loss from
interest rate swap (152,930) 662,890
-----------------------------------------------------------------
Non-cash expenses from the
amortization of compensation
cost recognized for restricted
shares issued 84,835 254,179
-----------------------------------------------------------------
Adjusted Net Income 10,877,308 27,602,426
-----------------------------------------------------------------
Plus Net Interest expense 3,167,333 6,690,502
-----------------------------------------------------------------
Plus Depreciation 6,385,002 15,697,131
-----------------------------------------------------------------
Plus Amortization -- --
-----------------------------------------------------------------
Adjusted EBITDA 20,429,643 49,990,059
-----------------------------------------------------------------
(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 Second Quarter Second Quarter
Ended June 30, Ended June 30,
2007 2008
-----------------------------------------------------------------
Net Income 5,491,315 24,610,980
-----------------------------------------------------------------
Income allocable to Class B common
shares 814,809 --
-----------------------------------------------------------------
Income available to Class A common
shares 4,676,506 24,610,980
-----------------------------------------------------------------
Weighted average number of Class A
common shares basic 11,497,656 26,927,648
-----------------------------------------------------------------
Weighted average number of Class A
common shares diluted 11,506,757 27,155,816
-----------------------------------------------------------------
Earnings per Class A common shares
basic and diluted 0.41 0.91
-----------------------------------------------------------------
Reconciliation of Net Income to
Adjusted Net Income
-----------------------------------------------------------------
Net Income 5,491,315 24,610,980
-----------------------------------------------------------------
Non-cash revenue and depreciation
due to below market acquired time
charters (60,709) (6,845,232)
-----------------------------------------------------------------
Unrealized profit from interest
rate swap (241,501) (4,519,893)
-----------------------------------------------------------------
Non-cash expenses from the
amortization of compensation cost
recognized for restricted shares
issued 42,652 119,764
-----------------------------------------------------------------
Adjusted Net Income 5,231,757 13,365,619
-----------------------------------------------------------------
Weighted average number of common
shares basic 11,497,656 26,927,648
-----------------------------------------------------------------
Weighted average number of common
shares diluted 11,506,757 27,155,816
-----------------------------------------------------------------
Adjusted earnings per share
basic (1) 0.46 0.50
-----------------------------------------------------------------
Adjusted earnings per share
diluted (1) 0.45 0.49
-----------------------------------------------------------------
(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 Six months Six months
Ended June 30, Ended June 30,
2007 2008
-----------------------------------------------------------------
Net Income 11,305,841 40,375,820
-----------------------------------------------------------------
Income allocable to Class B common
shares 1,677,576 --
-----------------------------------------------------------------
Income available to Class A common
shares 9,628,265 40,375,820
-----------------------------------------------------------------
Weighted average number of Class A
common shares basic 11,497,656 26,601,327
-----------------------------------------------------------------
Weighted average number of Class A
common shares diluted 11,506,757 26,961,407
-----------------------------------------------------------------
Earnings per Class A common shares
basic 0.84 1.52
-----------------------------------------------------------------
Earnings per Class A common shares
diluted 0.84 1.50
-----------------------------------------------------------------
Reconciliation of Net Income to
Adjusted Net Income
-----------------------------------------------------------------
Net Income 11,305,841 40,375,820
-----------------------------------------------------------------
Non-cash revenue and depreciation due
to below market acquired time
charters (360,438) (13,690,463)
-----------------------------------------------------------------
Unrealized (profit) / loss from
interest rate swap (152,930) 662,890
-----------------------------------------------------------------
Non-cash expenses from the
amortization of compensation cost
recognized for restricted shares
issued 84,835 254,179
-----------------------------------------------------------------
Adjusted Net Income 10,877,308 27,602,426
-----------------------------------------------------------------
Weighted average number of common
shares basic 11,497,656 26,601,327
-----------------------------------------------------------------
Weighted average number of common
shares diluted 11,506,757 26,961,407
-----------------------------------------------------------------
Adjusted earnings per share basic (1) 0.95 1.04
-----------------------------------------------------------------
Adjusted earnings per share diluted (1) 0.95 1.02
-----------------------------------------------------------------
(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 Consolidated Balance Sheets
As of December 31, 2007 and June 30, 2008
(Expressed in United States Dollars)
-----------------------------------------------------------------
December 31, June 30, 2008
2007
Assets
Current assets
Cash and cash equivalents 31,328,637 81,799,243
Trade receivables 354,154 143,063
Other receivables 287,546 1,023,553
Prepaid expenses 654,576 465,379
Due from management company -- 203,799
Inventories 801,373 816,730
----------------------------------------------------------------
Total current assets 33,426,286 84,451,767
----------------------------------------------------------------
Fixed assets
Advances for vessels acquisitions -- 7,925,000
Vessels at cost 633,378,703 633,378,703
Less:accumulated depreciation (18,268,064) (33,965,195)
----------------------------------------------------------------
Total fixed assets 615,110,639 607,338,508
----------------------------------------------------------------
Other assets 1,584,950 1,736,858
Restricted cash 8,010,000 5,510,000
Other long-term receivables 1,340,602 1,542,228
----------------------------------------------------------------
Total Assets 659,472,477 700,579,361
----------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities
Trade accounts payable (including
balance due to a related party of
$118,317 and $536,119 as of
Dercember 31, 2007 and June 30,
2008, respectively) 2,487,291 3,422,517
Accrued expenses 5,494,431 3,568,546
Due to management company 1,642,805 --
Interest rate swap -- 1,688,852
Deferred income 3,176,938 3,024,232
Current portion of long-term debt 9,000,000 12,400,000
----------------------------------------------------------------
Total current liabilities 21,801,465 24,104,147
----------------------------------------------------------------
Long-term debt 309,000,000 332,410,000
Other long-term payable 586,499 1,330,940
Interest rate swap 1,370,701 344,739
Below market acquired time charters 51,077,602 36,010,616
----------------------------------------------------------------
Total long-term liabilities 362,034,802 370,096,295
----------------------------------------------------------------
Total Liabilities 383,836,267 394,200,442
----------------------------------------------------------------
Commitments and Contingencies
Shareholders' equity
Preferred shares, $0.001 par value;
25,000,000 authorized, none issued,
none outstanding at December 31,
2007 and June 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 27,133,015 issued and
outstanding at June 30, 2008 25,745 27,133
Class B common shares, $0.001 par
value; 5,000,000 athorized, none
issued and outstanding at December
31, 2007 and June 30, 2008 -- --
Additional paid-in capital 304,408,972 318,179,013
Accumulated deficit (28,798,507) (11,827,227)
----------------------------------------------------------------
Total shareholders' equity 275,636,210 306,378,919
----------------------------------------------------------------
Total Liabiliies and Shareholders'
Equity 659,472,477 700,579,361
----------------------------------------------------------------
Paragon Shipping Inc.
Unaudited Consolidated Statement of Operations
For the three months ended June 30, 2007 and June 30, 2008
(Expressed in United States Dollars)
------------------------------------------------------------------
Three Months Three Months
Ended June 30, Ended June 30,
2007 2008
Revenue
Time charter revenue (including
amortization of below market
acquired time charters of $67,500
and $7,533,493 for the three months
ended June 30, 2007 and 2008,
respectively) 13,690,385 40,621,454
Less: commissions 711,502 1,954,504
------------------------------------------------------------------
Net Revenue 12,978,883 38,666,950
------------------------------------------------------------------
Expenses
Voyage expenses 50,597 147,676
Vessels operating expenses (including
expenses charged by a related party
of $18,773 and $41,791 for the three
months ended June 30, 2007 and 2008,
respectively) 1,862,943 4,864,057
Dry-docking expenses -- 509,936
Management fees charged by a related
party 373,276 931,831
Depreciation 3,255,806 7,848,565
General and administrative expenses
(including share based compensation
of $42,652 for the three months ended
June 30, 2007 and $119,764 for the
three months ended June 30, 2008 703,046 1,586,699
------------------------------------------------------------------
Operating Income 6,733,215 22,778,186
------------------------------------------------------------------
Other Income (Expenses)
Interest and finance costs (1,791,930) (3,482,532)
Profit on interest rate swap 241,501 4,105,821
Interest income 189,000 320,622
Other income 912,351
Gain from the change in fair value
of warrants 125,640 --
Foreign currency losses (6,111) (23,468)
------------------------------------------------------------------
Total Other Expenses, net (1,241,900) 1,832,794
------------------------------------------------------------------
Net Income 5,491,315 24,610,980
Income allocable to Class B common
shares 814,809 --
------------------------------------------------------------------
Income available to Class A common
shares 4,676,506 24,610,980
==================================================================
Earnings per Class A common share,
basic $ 0.41 $ 0.91
Earnings per Class A common share,
diluted $ 0.41 $ 0.91
Earnings per Class B common share,
basic and diluted $ 0.00 --
Weighted average number of Class A
common shares, basic 11,497,656 26,927,648
Weighted average number of Class A
common shares, diluted 11,506,757 27,155,816
Weighted average number of Class B
common shares, basic and diluted 2,003,288 --
Paragon Shipping Inc.
Unaudited Consolidated Statement of Operations
For the six months ended June 30, 2007 and June 30, 2008
(Expressed in United States Dollars)
------------------------------------------------------------------
Six Months Six Months
Ended June 30, Ended June 30,
2007 2008
Revenue
Time charter revenue (including a
mortization of below market
acquired time charters of $373,500
and $15,066,986 for the six months
ended June 30, 2007 and 2008,
respectively) 27,228,939 81,075,548
Less: commissions 1,375,051 3,688,357
------------------------------------------------------------------
Net Revenue 25,853,888 77,387,191
------------------------------------------------------------------
Expenses
Voyage expenses 88,653 199,573
Vessels operating expenses (including
expenses charged by a related party
of $39,960 and $64,865 for the six
months ended June 30, 2007 and 2008,
respectively) 3,569,182 8,959,711
Dry-docking expenses -- 622,458
Management fees charged by a related
party 726,743 1,696,595
Depreciation 6,385,002 15,697,131
General and administrative expenses
(including share based compensation
of $84,835 for the six months ended
June 30, 2007 and $254,179 for the
six months ended June 30, 2008 1,251,140 2,865,970
------------------------------------------------------------------
Operating Income 13,833,168 47,345,753
------------------------------------------------------------------
Other Income (Expenses)
Interest and finance costs (3,508,116) (7,571,130)
Profit / (loss) on interest rate swap 152,930 (1,076,962)
Interest income 340,783 880,628
Other income 912,351
Gain from the change in fair value of
warrants 493,962 --
Foreign currency losses (6,886) (114,820)
------------------------------------------------------------------
Total Other Expenses, net (2,527,327) (6,969,933)
------------------------------------------------------------------
Net Income 11,305,841 40,375,820
Income allocable to Class B common
shares 1,677,576 --
------------------------------------------------------------------
Income available to Class A common
shares 9,628,265 40,375,820
==================================================================
Earnings per Class A common share,
basic $0.84 $1.52
Earnings per Class A common share,
diluted $0.84 $1.50
Earnings per Class B common share,
basic and diluted $0.00 --
Weighted average number of Class A
common shares, basic 11,497,656 26,601,327
Weighted average number of Class A
common shares, diluted 11,506,757 26,961,407
Weighted average number of Class B
common shares, basic and diluted 2,003,288 --
Paragon Shipping Inc.
Unaudited Consolidated Statement of Shareholders' Equity
For the six months ended June 30, 2008
(Expressed in United States Dollars)
------------------------------------------------------------------
Class A Shares
--------------
Additional
Number of Par Paid-in Accumulated
Shares Value Capital deficit Total
------------------------------------------------------------------
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 1,363,032 1,363 13,515,887 13,517,250
Share
based
compensa-
tion 254,179 254,179
Issuance
of
restricted
Class A
common
shares 30,000 30 (30) --
Cancellation
of
restricted
Class A
common
shares (5,000) (5) 5 --
Dividends
paid (23,404,540) (23,404,540)
Net Income 40,375,820 40,375,820
------------------------------------------------------------------
Balance
June 30,
2008 27,133,015 27,133 318,179,013 (11,827,227) 306,378,919
------------------------------------------------------------------
Paragon Shipping Inc.
Unaudited Consolidated Statement of Cash Flows
For the six months ended June 30, 2007 and June 30, 2008
(Expressed in United States Dollars)
------------------------------------------------------------------
Six Months Six Months
Ended June 30, Ended June 30,
2007 2008
Cash Flows from Operating Activities
Net Income 11,305,841 40,375,820
Adjustments to reconcile net income to
net cash provided by operating
activities
Depreciation 6,385,002 15,697,131
Amortization of below market acquired
time charters (373,500) (15,066,986)
Amortization of financing costs 68,776 282,381
Share based compensation 84,835 254,179
Unrealized (profit) / loss on interest
rate swap (152,930) 662,890
Gain from the change in fair value of
warrants (493,962) --
Changes in assets and liabilities
(Increase) / decrease in trade
receivables (51,905) 211,091
Decrease / (increase) in other
receivable 800,754 (736,007)
(Increase) / decrease in prepaid
expenses (639,190) 189,197
Increase in inventories (238,388) (15,357)
Increase in due from management
company (1,427,163) (203,799)
Increase in other long term
receivables -- (201,626)
Increase in trade accounts payable 1,455,247 935,226
Decrease in accrued expenses (78,544) (1,925,885)
Decrease in due to management company (1,741,872) (1,642,805)
Increase /(decrease) in deferred
income 783,180 (152,706)
Increase in other long-term payable -- 744,441
------------------------------------------------------------------
Net cash from operating activities 15,686,181 39,407,185
------------------------------------------------------------------
Cash flow from investing activities
Asquisition of vessels and capital
expenditures (55,862,193) --
Advances for vessel acquisitions -- (7,925,000)
Restricted cash (3,010,000) 2,500,000
------------------------------------------------------------------
Net cash used in investing activities (58,872,193) (5,425,000)
------------------------------------------------------------------
Cash flows from financing activities
Proceeds from long-term debt 30,812,500 60,000,000
Repayment of long-term debt -- (33,190,000)
Payment of financing costs (108,470) (434,289)
Proceeds from the issuance of Class A
common shares from the exercise of
warrants and options -- 13,517,250
Dividends paid (5,047,725) (23,404,540)
------------------------------------------------------------------
Net cash from financing activities 25,656,305 16,488,421
------------------------------------------------------------------
Net (decrease) / increase in cash and
cash equivalents (17,529,707) 50,470,606
Cash and cash equivalents at the
beginning of the period 32,331,848 31,328,637
------------------------------------------------------------------
Cash and cash equivalents at the end
of the period 14,802,141 81,799,243
------------------------------------------------------------------
Supplemental disclosure of cash flow
information
Cash paid during the period for
interest 3,300,422 7,071,170