Ardmore Shipping Corporation · NYSE:ASC
Ardmore Shipping — Investor Presentation (July 2020)
45 slides from Ardmore Shipping's investor presentation, Jul 31, 2020
Slide 1: Investor Presentation July 2020
Investor Presentation July 2020 Exhibit 99.2
Slide 2: Forward-looking statements
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 Corporat
Slide 3: Contents
II. Company Overview III. Product Tanker Industry V. Financial Overview VI. Investment Summary VII. Appendix IV. Attractive Market Outlook and Fundamentals Contents I. Recent Market Activity and Company Update
Slide 4: Highlights: Second Quarter 2020
Highlights: Second Quarter 2020 Reporting adjusted net profit(1) of $13.7 million, or $0.41 per share, for 2Q20 compared to adjusted net profit of $6.5 million, or $0.20 per share, for 1Q20 Tanker market was very strong in the second quarter, with Ardmore performing well on a relative basis, thus pr
Slide 5: Key Industry Developments
Key Industry Developments Market being driven by a tug of war between volatility, disruption and dislocation vs. fundamental oil demand (sharp decline then recovery yet to be determined) Impact of COVID-19 is unfolding as expected; product tanker market volatile with spikes and dips, currently emerg
Slide 6: Fleet and Operations
Fleet and Operations Fleet Maintenance Capex(2) Revenue Days Profile(1) 3Q20 and 4Q20 forecasted revenue days includes impact of newly acquired 2010-built MR and TC-in vessel, assuming delivery on September 1, 2020 and September 24, 2020 respectively Capex schedule is based on a cashflow basis and m
Slide 7: Financial Activity and Balance Sheet
Financial Activity and Balance Sheet Completed our first sustainability-linked financing with ABN AMRO in July in keeping with our commitment to progress $15 million facility contains pricing adjustment feature linked to Ardmore’s performance on CO2 emission reduction and other environmental and soc
Slide 8: Capital Allocation Policy: Progress and Priorities
Capital Allocation Policy: Progress and Priorities Capital allocation policy working very well; initiated to maintain fleet and build financial strength to enable counter-cyclical investment Continuing to focus on financial strength and debt reduction: Total repayments of $17.1 million on term loans
Slide 9: Summary of 2Q20 and outlook
2Q20 was a very profitable quarter driven by exceptional market volatility, earning adjusted net profit(1) of $13.7 million, or $0.41 per share, which provides an annualized earnings yield of 40% based on our stock price on July 27, 2020. In addition, we have added two ships on highly attractive ter
Slide 10: Contents
II. Company Overview III. Product Tanker Industry V. Financial Overview VI. Investment Summary VII. Appendix IV. Attractive Market Outlook and Fundamentals I. Recent Market Activity and Company Update Contents
Slide 11: Ardmore Investment Thesis
High Quality Fleet: 27 x “Eco” Product Tankers(1) Fully Integrated Shipping Company Financial Discipline and Focus on ROIC Low Cost Platform & Focus on Performance Highly Attractive Market Outlook Shareholder Friendly Corporate Governance Ardmore Investment Thesis Comprises 26 owned ships including
Slide 12: Long-term Strategy
Long-term Strategy Ardmore has a strong track record regarding long-term strategy execution (see slide 40 in appendix for more details) Ardmore’s strategy is based on the following principles: Consistent focus on modern, fuel-efficient, high-quality product and chemical tankers In-house commercial e
Slide 13: Assessing Growth Opportunities
Assessing Growth Opportunities We assess fleet growth opportunities based on prospects for performance improvement, long-term value creation, and protection of shareholders interests Regarding growth through M&A, we evaluate opportunities and engage in discussions regularly, always on the premise th
Slide 14: Corporate governance and shareholder value
Our independent board, full transparency and high-quality corporate governance represent significant value for shareholders through full alignment with Management and protection of shareholders interests Ardmore was recently recognized as #3 out of 52 public shipping companies overall, and the #1 ra
Slide 15: Modern, highly fuel-efficient fleet of MRs
Modern, highly fuel-efficient fleet of MRs Average age of owned fleet 7.1 years(1) Built at high-quality yards in Korea and Japan Quality fleet = lower operating cost, higher utilization and maximum value appreciation Complementary fleet Increased scale improves commercial flexibility High Quality V
Slide 16: Management team
Name Experience (Yrs) Past Positions Anthony Gurnee 38 CEO Mark Cameron 36 COO Paul Tivnan 18 CFO Gernot Ruppelt 18 CCO CEO of Industrial Shipping Enterprises, COO of MTM Group and CFO of Teekay Shipping Corp. Shipping financier with Citicorp and U.S. Naval Officer MBA, CFA, Fellow of the Institute
Slide 17: Board of Directors
Name Experience Curtis McWilliams Chairman of the Board Brian Dunne Chair of Audit Committee Mats Berglund Director Helen Tveitan de Jong Director Dr. Kirsi Tikka Director Director of Ardmore since 2016 and appointed Chairman of the Board effective January 2019 President and CEO of CNL Real Estate A
Slide 18: Top-tier corporate governance ranking
ASC ranked in the top tier of US public shipping companies for corporate governance: Ranked No. 1 Product Tanker Company Ranked No. 1 Foreign Private Issuer Fully independent Board of Directors and no related party and affiliated transactions(2) Governance very much in focus across the industry Comm
Slide 19: Performance-Driven Strategy
In the short run, it’s all about the market But over the longer term, it’s all about performance Our strategy is driven by long-term value creation on a through-the-cycle basis Ardmore takes a holistic approach: ROIC TTC vs. WACC Organizational effectiveness and efficiency Operational performance Ca
Slide 20: Environmental and social progress
Ardmore has been at the forefront of environmental and social progress for many years: One of the most fuel-efficient tanker fleets from the start (eco-design and eco-mod) Dedicated to operational efficiency as a means for further carbon reduction No scrubber installations on ships – IMO 2020 compli
Slide 21: Carbon Emissions Performance
Poseidon Trajectory vs. Ardmore AER(1)(2) Commentary Three Months Ended Three Months Ended June 30, 2020 March 31, 2020 Number of Vessels in Operation (at period end) 25 25 Fleet Average Age(3) 6.9 6.7 Commenced reporting carbon emissions with our second quarter results in 2019 Progressive thing to
Slide 22: Contents
II. Company Overview III. Product Tanker Industry V. Financial Overview VI. Investment Summary VII. Appendix IV. Attractive Market Outlook and Fundamentals I. Recent Market Activity and Company Update Contents
Slide 23: Oil Value Chain
Oil Value Chain OIL fe VALUE | CHAIN ‘ det ae \ ii ald, ARDMORE PRODUCT TANKER
Slide 24: MR Tankers in Perspective
UL / VLCC SUEZ AFRA PAN LR3 LR2 LR1 MR SR Stainless 801 569 667 74 21 380 376 2,198 995 766 Growing Share of World Tanker Fleet Product Share of Oil Seaborne Trade Increasing(2) 75% 25% 65% 35% MR tankers comprise ~32% of the world tanker fleet by number of ships(1) Seaborne oil transport is gradual
Slide 25: IMO2 ships are more sophisticated product tankers
Gasoline Diesel Kerosene Jet Fuel Naphtha Clean Petroleum Products (CPP) Chemicals* IMO 3 Tankers Cargo Tank Coating: Tank Size: Inerting: Crewing: IMO 2 Tankers Cargo: Tank Coating: Tank Size: Inerting: Crewing: IMO 2 (Coated) IMO 3 CPP + Vegoils Epoxy >3,000 m3 Required (standard IGS not suitable
Slide 26: MRs are the Yellow Cabs of the World Tanker Fleet
MRs Trade Everywhere And Are The Ship Of Choice For Oil Traders Due To Their Versatility MR VLCC LR1 LR2 MRs are the “Yellow Cabs” of the World Tanker Fleet(1) Vessels Value AIS Data, September, 2019
Slide 27: Contents
II. Company Overview III. Product Tanker Industry V. Financial Overview VI. Investment Summary VII. Appendix IV. Attractive Market Outlook and Fundamentals I. Recent Market Activity and Company Update Contents
Slide 28: Product Tanker Demand Drivers
Increased Volumes Export-Oriented Output Seasonal Demand (e.g. Winter Market) Geopolitical Tensions Oil Consumption Growth Oil Price Volatility Voyage Distances Trading Activity Refinery Dislocation Inventory Levels and Regional Imbalances Demand / Supply Spikes Product Tanker Demand Drivers Oil Pri
Slide 29: Product Tanker Orderbook and Fleet Development
5.9% Product Tanker Orderbook and Fleet Development(4)(5) Oil Consumption Starting to Increase as Economies Reopen(2) Global economy is slowly emerging from the COVID-19 pandemic; the global economy expected to grow by 5.4% in 2021 vs. -4.9% in 2020(1) Oil consumption expected to gradually recover t
Slide 30: Scrapping Set to Continue
+27% YoY +37% YoY >20 years old: 219 vessels (7.4% Fleet) at June 30, 2020 1,398 product tankers (46% of total fleet) to be >15 years old in three years 9 Vessels Scrapped YTD(3) 22 Vessels Scrapped 2019 Product Tanker Fleet Profile(2) Scrapping Set to Continue: Estimate > 40 Ships Per Year(1) A tan
Slide 31: Industry Fundamentals: Chemical Tankers
Type CAGR Methanol 6.6% Paraxylene 5.3% Ethylene Glycol 4.3% Chemical tankers should directly benefit from the global economic rebound in 2021 Chemical tanker trade is highly correlated to Global GDP(1)(2) Major end users include automotive and construction industries Long-term outlook remains posit
Slide 32: Contents
II. Company Overview III. Product Tanker Industry V. Financial Overview VI. Investment Summary VII. Appendix IV. Attractive Market Outlook and Fundamentals I. Recent Market Activity and Company Update Contents
Slide 33: Finance: Philosophy and Focus
Financial strength and flexibility will be the key to delivering long-term shareholder value; need to be able to grow countercyclically Focused on de-levering: All debt is amortizing and no material near-term debt maturities (majority of debt / leases matures after Dec 2024) Continuing to pay down d
Slide 34: Top Shareholders
Top 20 Shareholders(1) No Holder Position Percent 1 Aristotle Capital Management LLC 3,453,461 10.39% 2 Fidelity Management and Research LLC 2,575,425 7.75% 3 Dimensional Fund Advisors LP 2,158,286 6.50% 4 Donald Smith & Co Inc 2,009,443 6.05% 5 BlackRock Inc 1,977,344 5.95% 6 Private Management Gro
Slide 35: Capital Allocation Policy
Maintain fleet: Ardmore is committed to maintaining a best-in-class fleet of modern, fuel-efficient product tankers. Investments will include upgrades for improved operating performance, regulatory compliance, and fleet renewal as required. Reduce leverage to 40%: Ardmore believes that a strong bala
Slide 36: Contents
II. Company Overview III. Product Tanker Industry V. Financial Overview VI. Investment Summary VII. Appendix IV. Attractive Market Outlook and Fundamentals I. Recent Market Activity and Company Update Contents
Slide 37: Company Highlights and Market Summary
Company Highlights: A leading product tanker company listed on the NYSE High-quality fleet of 27 “Eco” MRs built in Korea and Japan, with average age of 7.1 years(1) Strategy focused on maximizing ROIC through operating performance, cost efficiency and market timing Conservative capital structure; l
Slide 38: Contents
II. Company Overview III. Product Tanker Industry V. Financial Overview VI. Investment Summary VII. Appendix IV. Attractive Market Outlook and Fundamentals I. Recent Market Activity and Company Update Contents
Slide 39: Refinery Utilization and MR Charter Rates
Refinery Utilization: Coming Off the Bottom(3) OVX V. MR Charter Rates(1)(2) Product tankers have enjoyed unprecedented levels of disruption and volatility in the second quarter MR rates surged April / May on the back of record oil price volatility and market disruption before easing in June / July(
Slide 40: Ardmore Milestones
2010 – 2012: Commenced with 1 x MR with Private Equity sponsor and grew to 8 x vessels on water 2013: $140mln IPO on NYSE at premium to NAV; newbuilding orders takes fleet to 20 ships 2014: $108mln follow-on offering at premium to NAV and acquired 4 x MRs Capital Markets and Transactions Strong Oper
Slide 41: Scale Efficiency Illustration
Scale Efficiency Illustration(1) ASC FY 2019 ASC 1H20 Actual + 8 Eco MRs + 25 Eco MRs Actual + 8 Eco MRs + 25 Eco MRs No. of MRs in Operation 20 28 45 19 27 44 Total No. of Owned Ships in Fleet(2) 26 34 51 25 33 50 Eco-design MR TCE $15,781 $15,781 $15,781 $20,551 $20,551 $20,551 MR TCE $15,382 $15,
Slide 42: GAAP Reconciliation
GAAP Reconciliation Three months ended Six months ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 US$ Net income/ loss 13,583,523 (9,943,005) 20,102,204 (19,096,784) Loss on sale of vessel - 6,592,429 - 13,162,192 Unrealized losses on derivatives 99,292 - 99,292 - Adjusted earnings / (
Slide 43: Refinery Process Summary
Jet Kerosene Diesel Heating Oil Atmospheric Distillation Unit Vacuum Distillation Unit Hydrocracker Delayed Coker Fluid Catalytic Cracker Final Treating & Blending Gasoline Distillate Fuel Oils Lubes LPG Naphtha Kerosene / Jet Diesel L.S.S.R. L.S./H.S. Straight Run Residual Asphalt / Bunkers Residue
Slide 44: Origin of Product and Chemical Cargos
. Crude Oil NGL Plant Gas Refinery Ethylene Cracker Naphtha Cracker Naphtha Hydrogen Reformate Ethane Propane Butane Naphtha Pygas Ethylene Propylene Butylene Ethylene Dichloride Ethylene Glycol Linear Alcohols Vinyl Acetate Styrene Misc chemicals Manufacturing Polystyrene Fibres Resin Latex Polyest
Slide 45: Refinery Capacity to Grow in Export Oriented Locations
Refinery capacity growth in line with oil demand growth: Almost 80% of incremental capacity expected to be export oriented refineries in Asia and the Middle East leading to increasing tonne-miles(1) Expected Refinery Capacity Growth (2018 – 2025)(1) Total Scheduled Projects by Region (2019 – 2025)(1