ARDMORE SHIPPING CORPORATION 2014 - Amazon S3€¦ · · 2017-05-03ARDMORE SHIPPING CORPORATION ... Ardmore Seafox Product/Chemical 49,999 2/3 Jun-15 Korea MI Eco-design ... o Reduced

ARDMORE SHIPPING CORPORATION

First Quarter 2017

Earnings Presentation

Modern Fleet of Eco-design and Eco-mod built at high quality Korean and Japanese shipyards with upgrades to improve fuel efficiency and commercial capability

2

Disclaimer

This presentation contains certain statements that may be deemed to be “forward-looking statements” within the

meaning of applicable U.S. federal securities laws. All statements, other than statements of historical facts, that

address activities, events or developments that Ardmore Shipping Corporation (“Ardmore” or the “Company”)

expects, projects, believes or anticipates will or may occur in the future, including, without limitation, statements

about: future operating or financial results; global and regional economic conditions and trends; pending vessel

acquisitions or possible upgrades to vessels; the Company’s business strategy and expected capital spending or

operating expenses; competition in the tanker industry; shipping market trends; the Company’s financial condition

and liquidity, including ability to obtain financing in the future to fund capital expenditures, acquisitions and other

general corporate activities; the Company’s share repurchase program; ability to enter into fixed-rate charters after

the current charters expire and the Company’s ability to earn income in the spot market; expectations of the

availability of vessels to purchase and the time it may take to construct new vessels and vessels’ useful lives are

forward-looking statements. Although the Company believes that its expectations stated in this presentation are

based on reasonable assumptions, actual results may differ from those projected in the forward-looking

statements.

Factors that might cause or contribute to such a discrepancy include, but are not limited to, the risk factors

described in the Company's filings with the Securities and Exchange Commission (the "SEC"), including the

Company’s Annual Report on Form 20-F for the year ended December 31, 2016. This presentation is for

information purposes only and does not constitute an offer to buy or sell securities of the Company. For more

complete information about the Company, the information in this presentation should be read together with the

Company's filings with the SEC which may be accessed on the SEC website at www.sec.gov.

http://www.sec.gov/


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Earnings Release: First Quarter 2017

Performance and Recent Activity

Product and Chemical Tanker Markets

Fleet Update

Financial Review

Summary

Appendix

Agenda


4

Highlights


5

Performance and Recent Market Activity

Highlights

Reported EBITDA of $11.7 million and net loss $2.2 million,

equating to loss of $0.06 per share in the first quarter; compared to

net loss of $3.7 million or $0.11 per share in fourth quarter 2016

Recently acquired 6 x Eco-Design MR’s highly accretive, generated

$0.8 million equating to 42% increase in operating income

Delivered satisfactory chartering performance in soft market with:

o Spot and pool MR tankers averaging $13,131 per day in 1Q17 vs.

$12,113 in 4Q16

o Chemical tankers averaging $12,907 per day in 1Q17 vs $12,502 in

4Q16

Maintained tight control of operating costs and overhead expenses

Demand impacted in the short-term by high levels of refined product

inventories; evidence that drawdown is well underway

Fundamentals remain strong; demand set to exceed supply in 2017

which should result in rebound in charter rates as early as 4Q17

Maintained dividend policy of paying out 60% of earnings from

continuing operations. Consistent with policy, the Company is

declaring no dividend for 1Q17

6

High Quality Fleet

1. Average age as at Mar 31, 2017

Vessel Name Type Dwt Tonnes IMO Built Country Flag Specification

Ardmore Seavaliant Product/Chemical 49,998 2/3 Feb-13 Korea MI Eco-design

Ardmore Seaventure Product/Chemical 49,998 2/3 Jun-13 Korea MI Eco-design

Ardmore Seavantage Product/Chemical 49,997 2/3 Jan-14 Korea MI Eco-design

Ardmore Seavanguard Product/Chemical 49,998 2/3 Feb-14 Korea MI Eco-design

Ardmore Sealion Product/Chemical 49,999 2/3 May-15 Korea MI Eco-design

Ardmore Seafox Product/Chemical 49,999 2/3 Jun-15 Korea MI Eco-design

Ardmore Seawolf Product/Chemical 49,999 2/3 Aug-15 Korea MI Eco-design

Ardmore Seahawk Product/Chemical 49,999 2/3 Nov-15 Korea MI Eco-design

Ardmore Endeavour Product/Chemical 49,997 2/3 Jul-13 Korea MI Eco-design

Ardmore Enterprise Product/Chemical 49,453 2/3 Sep-13 Korea MI Eco-design

Ardmore Endurance Product/Chemical 49,466 2/3 Dec-13 Korea MI Eco-design

Ardmore Explorer Product/Chemical 49,494 2/3 Jan-14 Korea MI Eco-design

Ardmore Encounter Product/Chemical 49,478 2/3 Jan-14 Korea MI Eco-design

Ardmore Exporter Product/Chemical 49,466 2/3 Feb-14 Korea MI Eco-design

Ardmore Engineer Product/Chemical 49,420 2/3 Mar-14 Korea MI Eco-design

Ardmore Seafarer Product/Chemical 45,744 3 Aug-04 Japan MI Eco-mod

Ardmore Seatrader Product 47,141 — Dec-02 Japan MI Eco-mod

Ardmore Seamaster Product/Chemical 45,840 3 Sep-04 Japan MI Eco-mod

Ardmore Seamariner Product/Chemical 45,726 3 Oct-06 Japan MI Eco-mod

Ardmore Sealeader Product 47,463 — Aug-08 Japan MI Eco-mod

Ardmore Sealifter Product 47,472 — Jul-08 Japan MI Eco-mod

Ardmore Dauntless Product/Chemical 37,764 2 Feb-15 Korea MI Eco-design

Ardmore Defender Product/Chemical 37,791 2 Feb-15 Korea MI Eco-design

Ardmore Cherokee Product/Chemical 25,215 2 Jan-15 Japan MI Eco-design

Ardmore Cheyenne Product/Chemical 25,217 2 Mar-15 Japan MI Eco-design

Ardmore Chinook Product/Chemical 25,217 2 Jul-15 Japan MI Eco-design

Ardmore Chippewa Product/Chemical 25,217 2 Nov-15 Japan MI Eco-design

Total 27 1,202,568 4.6(1)


7

Product and Chemical Tanker Market

$10,000

$12,000

$14,000

$16,000

$18,000

$20,000

$22,000

$24,000

$26,000

$28,000

$30,000

1Q

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2Q

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4Q

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8

Product Tanker Market

Average MR Spot Market TCE Rates(1)

Product Tanker Orderbook and Fleet Development(3)

MR product tanker rates improved slightly in the quarter; ASC MR

Spot & Pool TCE averaged $13,131 in 1Q17 vs. $12,113 in 4Q16

1Q17 Activity:

o Demand continues to be negatively impacted by de-stocking from

high level of refined product inventories

o But offsetting strong demand from Latin America for US gasoline

and diesel coupled with increased activity into West Africa

resulting in stronger Atlantic basin rates

Demand Outlook:

o Demand growth estimated to be in 4-5% range; underpinned by

1.3 million bpd estimated oil consumption growth in 2017(4)

o Ongoing refinery development away from points of consumption;

7.2 million bpd additional refinery capacity by 2022(5)

MR supply growth continues to drop; orderbook at historical lows,

pace of deliveries receding while scrapping continues:

o Deliveries 1Q17: January: 16 / February: 7 / March: 2

o 51 MRs scheduled to deliver from 2Q17 to 4Q17 (before

slippage); scrapping estimated at 20 – 25 vessels per year

o Resulting in net fleet growth of approximately 2.0% 2017 and 1%

or less 2018(6)

Overall, continued tightening of supply / demand balance and end

to destocking of refined products should lead to sustained increase

in charter rates as early as 4Q17

1. Source: Howe Robinson Partners - Rates quoted are the average $/day rates for TC6, TC7, TC 10, TC11/4 and TC2/14 for a MR Eco-design vessel from 1Q14 to 1Q172. Management’s estimates based on a full fleet of 27 vessels operating in the spot market for 363 revenue days / ship and MR product tankers earning $25,0000 / day and chemical tankers earning $18,000 / day3. Source: Clarksons Shipping Intelligence Network and management’s estimates as at Apr 18th , 20174. Source: International Energy Agency, “Oil Market Report Apr 2017”. IEA estimates oil demand growth will average 1.2 million bpd per annum from 2016 to 2022 (IEA: “Market Series Report: Oil 2017”)5. Source: International Energy Agency, “Market Series Report: Oil 2017”. Gross capacity additions, excludes impact of closures6. Management’s estimates of deliveries for 2017 and 2018, net of estimated scrapping

4.5%

EPS Breakeven

ASC EPS ~$2.80(2) TCE $25,000 / day

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Chemical tanker market also slightly improved in 1Q17, ASC charter

rates averaging $12,907 vs $12,502 in 4Q16

1Q17 Activity:

o Continued strength in ethanol exports from US to South America

o Reduced demand for methanol cargoes USG / China due high prices

o Southeast Asian palm oil trade at low levels

o ASC chemical fleet: 40% CPP / 40% chemicals / 20% vegoils

Demand Outlook:

o Commodity chemical seaborne trade expected to grow approximately

5% per annum in medium term(3)

o Vegoil market expected to strengthen through 2017 as output in

Southeast Asia increases due to favourable growing conditions

o Strengthening product tanker market will increase demand for

chemical tankers in CPP trade

o Ongoing petrochemical production increase in US and Middle East;

four ethylene crackers (5 MT capacity) expected to start up in the US

over next 12 months(4)

o Seaborne trade of methanol expected to grow at average of 7% per

annum to 2021(5)

Orderbook at moderate levels; 10.3% of existing fleet (Dwt basis):

o Stainless steel tankers 71% of orderbook / 17.5% of stainless fleet,

Coated IMO2 tankers 29% of orderbook / 5.2% of Coated IMO2 fleet

o Overall net fleet growth of approximately 5% in 2017(6)

9

Chemical Tanker Market

Chemical Tanker Spot Market Performance(1)

Chemical Tanker Orderbook and Fleet Development(2)

1. Source: Clarksons Platou, Clarksons SIN. Management’s estimates based average chemical tanker spot rates on selected trades (Houston-F.East / Gulf-F.East / Gulf-Med / Houston-Rotterdam / Rotterdam-Houston / Houston-Santos / Gulf-Rotterdam / Ulsan-Houston)

2. Orderbook for coated IMO2 with average tank size <3000m3 and stainless steel ships above 10,000 Dwt as at Apr 18th, 20173. Source: Richardson Lawrie Associates, “Chemical Carrier World to 2021”, Apr17. Estimated average growth in total deep sea commodity chemicals trade to 20214. Source: Deutsche Bank market research 5. Source: Richardson Lawrie Associates, “Chemical Carrier World to 2021”, Apr17 6. Management’s estimates, based on expected 2017 deliveries, net of estimated scrapping

10.3%

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65.00

1Q

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$ /

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Average of 8 Chemical Tanker Routes from Clarksons (Gross Freight before Voyage Costs)


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Fleet Update

7,071

8,635

2,410 2,417 2,449 2,483

9,759

-

2,000

4,000

6,000

8,000

10,000

12,000

2015 ACT 2016 ACT 1Q17 ACT 2Q17 EST 3Q17 EST 4Q17 EST 2017 EST

Rev

enu

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ays

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Fleet Update

Revenue Days Profile(1)Fleet Update

1. Revenue Days based on management’s estimates.

+13% (Y-o-Y)

Revenue days to increase by 13% to 9,759 in 2017

Drydocks:

o 1Q17: Ardmore Seavanguard intermediate survey

o 2Q17: Expect 30 drydock days


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Financial


13

Financial Performance

1. EBITDA is a non-GAAP measure. A reconciliation of this measure is included in the Appendix of this presentation2. Definitions: Time Charter Equivalent (“TCE”) daily rate is the gross charter rate or gross pool rate, as appropriate, per revenue day plus Communication Victualing and Entertainment Income (“CVE”). For vessels employed on voyage

charters, TCE is the net rate after deducting voyage costs incurred by commercial managers3. Fleet operating costs per day are routine operating expenses and comprise crewing, repairs and maintenance, insurance, stores, lube oils and communication costs. They do not include additional costs related to upgrading or

enhancement of the vessels that are not capitalized 4. Technical management fees per day are fees paid to third-party technical managers 5. Vessel operating costs per day include technical management fees

INCOME STATEMENT DATA Three months endedUS$ millions, unless otherwise stated Mar 31, 2017 Mar 31, 2016

ResultsRevenue 49.7 43.5EBITDA(1) 11.7 18.8Net (loss) / income (2.2) 6.7Net (loss) / income per share ($/share) (0.06) 0.26

General and Administrative expensesCorporate 3.0 3.3Commercial and Chartering 0.7 0.4

Depreciation & amortization 9.1 7.6Interest & finance costs 4.9 4.4

OTHER OPERATING DATAAverage Number of Vessels 27 24

Fleet time charter equivalent per day ($/day)(2) 12,919 17,131

Operating cost per day ($/day)Fleet(3) 5,971 5,830Technical management fees(4) 390 364Total operating costs 6,361 6,194

Eco-Design MR(5) 6,221 5,854Eco-Mod MR(5) 6,459 6,572Eco-Design Chemical(5) 6,385 6,236

$1.9 mln $1.9 mln $1.9 mln

$0.8 mln $0.8 mln

ASC (Ex. 6 x MR's) Acquired x 6 ASC Total

$578,703

$450,102

ASC (Ex. 6 x MR's) ASC Total

Fleet Earnings: Most Recent Acquisition (6 x Eco-Des MR’s)

14

Corporate Overhead Per Ship Reduced(2)

Corporate Overhead per ship decreases by

~$130k per year

1. Calculation based on reported 1Q17 operating income of $2.7 million2. Pro-forma calculation based on reported 1Q17 corporate overhead of $3.0 million annualized for full year 20173. Full Year Basis

Acq. Fleet Generated $0.8 mln Operating Income 1Q17(1)

Operating Income increase of $0.8 mln equates to 42%

accretion$2.7 mln

Every $1,000/day increase in rates; Operating Income and Cash Flow increases by $10 million(3)

16,645 17,254

15,376

17,547

13,889 14,769

12,258

14,432

12,307 12,389 11,910

12,502 12,919 13,181

12,260 12,907

AVG. FLEET TCE MR ECO-DES MR ECO-MOD PROD/CHEM ECO-DES

2Q16 3Q16 4Q16 1Q17

15

Charter Rates

1. Time Charter Equivalent (“TCE”) daily rate is the gross charter rate or gross pool rate, as appropriate, per revenue day plus Communication Victualing and Entertainment Income (“CVE”). For vessels employed on voyage charters, TCE is the net rate after deducting voyage costs incurred by commercial managers. Chemical tankers are full IMO2 rated vessels

2. Calculations based on existing cost structure and assume (a) fleet of 27 vessels, (b) utilization of 99.45% , (c) 33.6 mln shares and (d) dividend policy of paying out 60% of earnings from continuing operations. Assumes no change in tax rate, cost of debt or share count

For every $1,000/day increase in rates, EPS increases by $0.29 cents and Dividend by $0.17 cents(2)

Time Charter Equivalent ($ / day)(1)

+37% YoY

AVG. FLEET MR ECO-DES MR ECO-MOD CHEM. TANKERS

Low Financial Leverage and every $1 million increase in vessel values = $0.80 in NAV / share(3)

16

Strong Balance Sheet

1. Debt balance includes impact of netting of deferred finance fees of $10.6 mln in 1Q17 ($11.2 mln in 4Q16) under US GAAP2. Leverage calculation based on gross debt before netting of deferred finance fees. Gross debt of $462.2 mln 1Q17 / $473.5 mln 4Q16 3. 27 ships x $1 million = $27 million / 33.6 million shares = $0.80 / share; assumes no change in share count

BALANCE SHEET DATA As at;

US$ millions, unless otherwise stated Mar 31, 2017 Dec 31, 2016

Cash 45.2 56.0

Receivables & Inventories 43.4 37.8Vessels & Drydock 780.1 788.7

Other Assets 1.2 1.2

Total Assets 869.8 883.6

Payables and Accruals 16.0 17.0

Debt & Capital Lease Obligations(1) 451.6 462.3

Equity 402.2 404.3

Total Liabilities and Equity 869.8 883.6

Debt / Debt + Equity(2) 53.5% 53.9%

17

Conservative Capital Structure

Book value of vessel assets $780.1 million and gross debt $462.2 million ($451.6 million net deferred finance fees) as at Mar 31,

2017(1)

Low corporate leverage: 53.5% as at Mar 31, 2017 with significant liquidity; cash and net working capital $72.6 million

All debt is amortizing at $44.6 million per year (No non-amortizing debt)

Debt Profile

1. Gross Debt excludes impact of netting of deferred finance fees as required under US GAAP ($462.2 mln - $10.6 mln = $451.6 mln)2. $72.6 mln consists of $45.2 mln cash and net working capital of approximately $27.4 mln

$462.2 $429.0

$780.1 $11.1 $11.1 $11.1

$72.6

Vessel Assets, Cash & NetWorking Capital

Gross Debt @ 1Q17 2Q 2017 3Q 2017 4Q 2017 Pro-Forma Debt @ 4Q17

Gross Debt Vessel Assets Debt Repayments Cash & Net Working Capital


18

Company Review and Summary


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Summary

Reported EBITDA of $11.7 million and net loss $2.2 million, equating to loss of $0.06 per share in the first quarter;

compared to net loss of $3.7 million or $0.11 per share in fourth quarter of 2016

Our recently acquired 6 x Eco-Design MR’s highly accretive, generated $0.8 million in 1Q17 equating to 42% increase

in operating income

MR spot rates improved slightly in 1Q17 due to strong demand from Latin America coupled with increased activity into

West Africa, resulting in strong Atlantic basin rates

Demand negatively impacted in the short-term by high levels of refined product inventories; evidence that drawdown is

well underway and may conclude in 4Q17

Fundamentals remain strong; demand growth estimated to be 4-5% range, underpinned by 1.3 million bpd oil

consumption growth, ongoing refinery development, and increasing trade complexity

Supply growth continues to drop; orderbook at historical lows, resulting net fleet growth approximately 2% in 2017 and

1% or lower in 2018, which sets the stage for significant rebound in charter rates as early as 4Q17

Through a combination of fully-delivered high-quality fleet, ongoing focus on spot chartering performance and cost

efficiency, Ardmore has significant earnings power where every $1,000 / day equates to 29 cents in EPS and 17 cents

in dividends(1)

1. Calculations based on existing cost structure and assume (a) fleet of 27 vessels, (b) utilization of 99.45% , (c) 33.6 mln shares and (d) dividend policy of paying out 60% of earnings from continuing operations. Assumes no change in tax rate, cost of debt or share count. No dividend payable in period where earnings are negative


20

Appendix

21

Non-GAAP Measures

1. EBITDA is defined as earnings before interest, taxes, depreciation and amortization. This non-GAAP measure is presented in this presentation as the Company believes that it provides investors with a means of evaluating and understanding how Ardmore’s management evaluates operating performance. This non-GAAP measure should not be considered in isolation from, as substitutes for, or superior to financial measures prepared in accordance with US GAAP. In addition, this non-GAAP measure does not have a standardized meaning, and is therefore unlikely to be comparable to similar measures presented by other companies

NON-GAAP MEASURES Three months ended

expressed in US$, unless otherwise stated Mar 31, 2017 Mar 31, 2016

Reconciliation of net (loss) / income to EBITDA

Net (loss) / income (2,167,191) 6,739,502

Interest income (90,614) (21,140)

Interest expense and finance costs 4,910,921 4,433,611

Income tax 14,500 20,000

Depreciation 8,446,753 7,051,829

Amortization of deferred dry dock expenditure 613,193 593,851

EBITDA(1) 11,727,562 18,817,653

Documents

ARDMORE SHIPPING CORPORATION 2014 - Amazon S3€¦ · · 2017-05-03ARDMORE SHIPPING CORPORATION ... Ardmore Seafox Product/Chemical 49,999 2/3 Jun-15 Korea MI Eco-design ... o Reduced