Ardmore Shipping Corporation · NYSE:ASC
Ardmore Shipping — Q2 2023 Earnings Presentation
26 slides from Ardmore Shipping's earnings presentation, Aug 1, 2023
Slide 1: Ardmore Shipping Second Quarter 2023
Ardmore Shipping Second Quarter 2023
Slide 2: Disclaimer
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 Shippi
Slide 3: Contents
Contents 3 I. Highlights II. Product and Chemical Tanker Fundamentals III. Operating and Financial Performance IV. Summary V. Appendices 3
Slide 4: Highlights
Highlights 4 TCE rates continue to be elevated and well above cash breakeven MR TCE Rates Resilient and Well Above Cash B/E(4) levels o Showing resilience during the second quarter, which was impacted $27,450 by above average refinery maintenance $26,100 o Remaining elevated during the third quart
Slide 5: Capital Allocation Policy
Capital Allocation Policy 5 Continued strong performance supporting consistent dividend, one-third of adjusted earnings Maintain fleet over time Continue to invest in fleet to optimize performance Sustain leverage below 40% Net leverage of 18% Ardmore will continue to develop and evaluate potential
Slide 6: Near-Term Product and Chemical Tanker Outlook
Near-Term Product and Chemical Tanker Outlook 6 Positive outlook with market anticipated to build through the second half of the year Product Tankers Serving Russian Trade(4) EU Embargo continuing to positively impact market o Re-ordering of supply chains adding to tonne-miles 445 o Notable increa
Slide 7: EU Refined Product Embargo
EU Refined Product Embargo 7 EU import tonne-miles anticipated to increase as inventories normalize EU Refined Product Embargo continuing to impact market EU Import Voyage Distances Multiplying o Following pre-embargo build, EU diesel imports initially declined as inventory drawn down(1) Russian P
Slide 8: Contents
Contents 8 I. Highlights II. Product and Chemical Tanker Fundamentals III. Operating and Financial Performance IV. Summary V. Appendices 8
Slide 9: Significant Supply-Demand Gap
Significant Supply-Demand Gap 9 Negligible net fleet growth combined with increasing tonne-miles supports market fundamentals Product and Chemical Tanker Demand vs. Net Fleet Growth(1)(2)(3)(4) 15.0% 11.4% 10.0% 8.8% 6.2% 4.9% 5.0% 3.9% 3.5% 3.1% 2.6% 2.5% 1.7% 2.0% 2.1% 0.8% 0.7% 0.7% 1.0% 0.4% 0.2
Slide 10: Aging Fleet & Historically Low Orderbook
Aging Fleet & Historically Low Orderbook 10 Supply dynamics continuing to highlight product tanker fleet replenishment gap Orderbook for Product Tankers at Historical Lows(1)(2) Global Product Tanker Fleet Aging Rapidly(1) MR Orderbook: 5% of fleet 16 200 70% Product Tanker Orderbook: 9% of fleet 18
Slide 11: Robust Long-Term Demand Drivers
Robust Long-Term Demand Drivers 11 Strong underlying demand growth in product and chemical tanker markets IEA Forecasting Continued Growth in Oil Demand(1) Russia-Ukraine conflict and EU Refined Products Embargo has heightened energy security concerns and led to a persistent re- 110 104.8 105.3 10
Slide 12: Contents
Contents 12 I. Highlights II. Product and Chemical Tanker Fundamentals III. Operating and Financial Performance IV. Summary V. Appendices 12
Slide 13: Continued Focus on Financial Strength
Continued Focus on Financial Strength 13 Robust financial position and conservative capital structure Net leverage declined to 17.9% in 2Q 2023, with total net debt of Meaningful De-levering of Balance Sheet Continues $109.6 million at the end of June 2023(1)(2) US$ millions, unless otherwise stat
Slide 14: Financial Highlights
Financial Highlights Resilient TCE performance and effective cost control Adjusted earnings of $23.7 million, or $0.57 per share, for 2Q Fleet TCE(3) 2023(1) 2Q 2023 2Q 2022 MR(4) $27,460 $30,739 Adjusted EBITDAR(2) (i.e., EBITDA plus bareboat equivalent Chemical Tankers $24,555 $20,254 lease ex
Slide 15: Fleet and Operational Highlights
Fleet and Operational Highlights Continuing to invest in the fleet to further optimize operating performance Significant investment in the fleet beyond routine drydockings Eight Drydockings Scheduled for 2023 o Eight drydockings in 2023 at an estimated cost of $13mln 4 4 o Incremental capex of $28
Slide 16: Significant Operating Leverage
Significant Operating Leverage For every $10,000 / day increase in TCE rates, EPS expected to increase by ~$2.30 / share annually(1)(2) Additional $10,000 / day in TCE equates to annual free cash flow of $95mln(1) $9.96 Fleet Average TCE for Trailing $7.69 4 Quarters: $35,400 $5.41 $3.14 $30,000 $40
Slide 17: Contents
Contents 17 I. Highlights II. Product and Chemical Tanker Fundamentals III. Operating and Financial Performance IV. Summary V. Appendices 17
Slide 18: Summary
Summary 18 Market: TCE rates continue to be elevated and well above our cash breakeven levels, with seasonal strength anticipated in the coming months The effect of the EU Embargo accelerating tonne-mile demand Wide supply-demand gap supports strong product and chemical tanker fundamentals Com
Slide 19: Contents
Contents 19 I. Highlights II. Product and Chemical Tanker Fundamentals III. Operating and Financial Performance IV. Summary V. Appendices 19
Slide 20: Dividend Payment
Dividend Payment 20 In line with our consistent Dividend Policy, Ardmore is pleased to declare Dividend Calculation a quarterly cash dividend for 2Q 2023 of $0.19 per share Three Months Ended Jun 30, o Quarterly dividend calculated as one-third of adjusted earnings(1) 2023 Adjusted Earnings before
Slide 21: Refinery Summary and Seaborne Product Trade
Refinery Summary and Seaborne Product Trade 21 Regional Refinery Shift(1)(2) Region Closures 2020 - 2026 Openings 2023 - 2026 Europe 1.2 0.1 Australia 0.5 - Middle East - 0.6 Africa 0.2 1.0 America 1.8 0.6 China 1.0 1.0 Asia (excl. China) 1.7 6.2 Total (mbd) 6.3 9.5 Seaborne Product Trade Balances(3
Slide 22: Refinery Dislocation Boosting Tonne-Mile Demand
Refinery Dislocation Boosting Tonne-Mile Demand(1) 22 (1) 1. Closures based on announcement periods 22
Slide 23: Ardmore Product and Chemical Tanker Rates
Ardmore Product and Chemical Tanker Rates(1) 23 FLEET AVERAGE TCE MR ECO-DES(2) CHEMICAL(3) $47,026 $43,174 $40,860 $40,308 $37,506 $38,021 $33,958 $32,956 $31,982 $30,739 $27,806 $27,460 $31,536 $27,508 $26,541 $26,100 $28,544 $24,500 $27,984 $23,000 $21,970 $24,555 $16,513 $20,254 $20,400 $15,155
Slide 24: Fleet Profile
Fleet Profile High Quality Vessels Vessel Name Ownership Type Dwt Tonnes IMO Built Country Flag Specification Ardmore Seahawk Leased Product/Chemical 49,999 2/3 Nov-15 Korea MI Eco-design Modern, highly fuel-efficient Ardmore Seawolf Leased Product/Chemical 49,999 2/3 Aug-15 Korea MI Eco-design fl
Slide 25: EBITDA + vessel lease expense component (i.e. EBITDAR)
EBITDA + vessel lease expense component (i.e. EBITDAR) 25 Three months ended Twelve months ended Reconciliation of net income / (loss) to EBITDAR(1) June 30, 2023 June 30, 2023 In thousands of U.S. Dollars Net income 24,507 184,364 Interest income (606) (1,286) Interest expense and finance costs 2,8
Slide 26: Ardmore Indicative Guidance 3Q 2023
Ardmore Indicative Guidance 3Q 2023(1) 26 MR Eco-Design Spot TCE: $26,100 (45% fixed) Chemical Tanker Fleet TCE: $20,400 (63% fixed) Revenue Days: 2,230 Operating Expenses: $15.5 million Charter-In Expenses: $4.0 million Depreciation and Amortization: $8 million Overhead (Commercial and Corporate):