Ardmore Shipping Corporation · NYSE:ASC
Ardmore Shipping — Q4 2023 Earnings Presentation
48 slides from Ardmore Shipping's earnings presentation, Feb 15, 2024
Slide 1: Earnings Presentation Fourth Quarter and Full Year 2023 & Investor Day 2024
Earnings Presentation Fourth Quarter and Full Year 2023 & Investor Day 2024
Slide 2: To Submit Questions for the Q&A Session
To Submit Questions for the Q&A Session Ardmore@IGBIR.com 2
Slide 3: 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 4: Ardmore Team
Ardmore Team Name History Curtis Mc Williams ▪ Director of Ardmore since 2016 and appointed Chairman of the Board effective January 2019 ▪ Co-Head of Global Transportation Group at Merrill Lynch ▪ President, CEO, and Director of Trustreet Properties Inc. Chair of the Board ▪ MBA Chicago Booth School
Slide 5: Contents
Contents 5 I. Earnings Presentation Fourth Quarter and Full Year 2023 II. Strategy Overview III. Market Outlook and Commercial Update IV. Summary V. Appendix 5
Slide 6: Highlights
Highlights 6 ▪ Another successful year for Ardmore, continuing a strong multi- Strong TCE Rates Well Above Cash Breakeven year trend; FY2023 adjusted earnings were $113.4 million or $35,400 $2.71 per share $32,500 $29,300 $30,100 ▪ 4Q 2023 performance reflected robust product and chemical tanker mar
Slide 7: Near-Term Product and Chemical Tanker Outlook
Near-Term Product and Chemical Tanker Outlook 7 Favorable underlying fundamentals bolstered by disruptive market conditions ▪ Red Sea crisis and re-routing of vessels is significantly adding Increasing Global CPP Tonne Miles(2) to average voyage lengths and product tanker demand 280 274 ▪ EU Refined
Slide 8: Continued Focus on Financial Strength
Continued Focus on Financial Strength 8 Maintaining conservative capital structure to drive earnings quality ▪ Reduced cash breakeven to $13,900 per day in a high Continuing to Build Financial Strength inflation environment, through effective cost control, lower debt levels, and access to revolving
Slide 9: Financial Highlights
Financial Highlights Robust earnings and cash flow generation ▪ Adjusted earnings of $26.1 million, or $0.63 per share, for 4Q Continued Focus on Cost Control & Efficiency Improvements 2023 and $113.4 million or $2.71 per share for full year 2023 Three Months Ended US$ millions, unless otherwise sta
Slide 10: Fleet and Operational Highlights
Fleet and Operational Highlights Nearing completion of drydocking program in 1Q 2024 ▪ Completed seven drydockings in 2023 with total capital Majority of Remaining Drydockings in 1Q 2024 expenditure of $39mln 7 o Including $25mln of capex relating to scrubber installations and a number of other effi
Slide 11: 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) $12.25 ASC 1Q 2024 Fixed to Date: $9.96 $35,400 $7.68 $5.39 $3.10 $30,000 $40,000 $50,000 $60,000 $70,000 Fleet Average TCE Additional $10,000 / day in TCE equates to
Slide 12: Summary
Summary 12 Market: ✓ Robust market continuing to strengthen into the first quarter ✓ Outlook boosted by current geopolitical and climate-related disruptions ✓ Market fundamentals remain highly favorable Company: ✓ 2023 was another very successful year for Ardmore ✓ Continuing to thrive in volatile m
Slide 13: Contents
Contents 13 I. Earnings Presentation Fourth Quarter and Full Year 2023 II. Strategy Overview III. Market Outlook and Commercial Update IV. Summary V. Appendix 13
Slide 14: Ardmore Shipping: Executing on a Consistent Strategy
Ardmore Shipping: Executing on a Consistent Strategy 14 NYSE listed with market cap of $670mln and ADTV of $14mln(1) Fleet of 26 Ships 22 4 Owned Time Charter-In Fully Integrated Company Commercial Platform and Technical Management Product Comprehensive Founded IPO and Energy Number One Ranked Chemi
Slide 15: Our Philosophy: Combining Performance & Progress
Our Philosophy: Combining Performance & Progress 15 Driving performance today while simultaneously pursuing progress Performance 4Q 2023 TCE Cash Breakeven Dividends Paid (1) $32,500 $13,900 $56mln TCE rates remain elevated with Cost efficiencies and reduced Since re-initiating quarterly momentum ap
Slide 16: Best-In-Class Governance With Top ESG Ranking
Best-In-Class Governance With Top ESG Ranking 16 Commentary Ardmore #1 Ranked Tanker Company and #4 Overall ▪ ASC ranked in the top tier of US public shipping companies for ESG(1): o Ranked #1 Tanker Company o Ranked in top quartile since commencement of Webber Scorecard in 2016 ▪ Fully independent
Slide 17: Balancing The Energy Transition with "Energy Reality"
Balancing The Energy Transition with “Energy Reality” 17 Our Energy Transition Plan drives performance today, while preparing for the future ▪ Ardmore deliberately developed its Energy Transition Plan (ETP) to realize opportunities in a dynamic market with accelerating environmental, technological,
Slide 18: Energy Transition Plan
Energy Transition Plan The ETP enhances current performance, while also positioning Ardmore for long-term success ETP Initiatives Description Energy Transition ▪ Working with industry leading technical partners to develop, test, and deploy Technologies cutting-edge solutions to drive onboard energy
Slide 19: Energy Transition Technologies: Recent Examples
Energy Transition Technologies: Recent Examples Continuing to invest in vessel upgrades, driving enhanced performance and reducing emissions 1. Microboiler 2. Variable Speed Drives 3. Ultrasonic Propeller Cleaning Reduces boiler fuel Reduces vessel’s electrical load and Prevents fouling around the p
Slide 20: Case Study: Microboilers
Case Study: Microboilers 20 Modest ETP capital investments yield meaningful emission savings and incremental returns Recent Initiative: Microboilers Reduces boiler fuel consumption when in Purpose port by instead using recovered exhaust waste heat for steam production Cost $225,000 / vessel Estimate
Slide 21: Capital Allocation Policy
Capital Allocation Policy 21 Returning capital to shareholders via variable dividend payments, while continuing to invest in fleet Continue to invest in fleet to improve performance and reduce Maintain fleet over time carbon emissions; executing gradual fleet modernization through selective transact
Slide 22: Long-Term Value Creation
Long-Term Value Creation 22 Ardmore positioned to leverage its world-class platform by building value through shipping cycles ▪ Ardmore’s nimble, performance-oriented approach, and platform is highly scalable o Product and chemical tanker focus o Strong governance and emphasis on transparency ▪ Regu
Slide 23: Contents
Contents 23 I. Earnings Presentation Fourth Quarter and Full Year 2023 II. Strategy Overview III. Market Outlook and Commercial Update IV. Summary V. Appendix 23
Slide 24: Market Outlook
Market Outlook 24 24
Slide 25: Sustained Tonne-Mile Increase
Sustained Tonne-Mile Increase 25 Red Sea and Panama Canal disruptions additive to ongoing impact of EU Embargo Panama Canal Impact EU Embargo and Red Sea Impact Russia – Northern Europe 4 – 6 Days Arabian Gulf – Europe US Gulf – 24 – 26 Days South America 9 – 11 Days Korea – South America 32 – 35 Da
Slide 26: Ongoing Market Disruption
Ongoing Market Disruption 26 Geopolitical and climate-related disruptions significantly increasing voyage distances ▪ Red Sea crisis and re-routing of vessels is significantly adding East: Product Tankers Transiting Suez Canal(2) to product tanker tonne-miles 30 -60% o Approximately 12% of all produ
Slide 27: Robust Long-Term Demand Drivers
Robust Long-Term Demand Drivers 27 Strong underlying demand growth in product and chemical tanker markets ▪ IEA forecasting continued growth in oil demand, driven by post- IEA Forecasting Continued Growth in Oil Demand(2) pandemic rebound and strong increases in petrochemical 110 104.8 105.3 105.7 c
Slide 28: Aging Fleet & Low Orderbook
Aging Fleet & Low Orderbook 28 Historically high average fleet age while orderbook remains low MR Fleet Age at Historical High Orderbook for MR Tankers Near Historical Lows(1)(2) 50% 120 MR Orderbook: 7.7% of fleet 60% 2008 2007 Product Tanker Orderbook: 13.0% of fleet 100 50% 40% 2009 Orderbook as
Slide 29: Significant Supply-Demand Gap
Significant Supply-Demand Gap 29 In summary, robust market fundamentals with strong demand as net fleet growth remains at low levels Product and Chemical Tanker Demand vs. Net Fleet Growth (1)(2)(3)(4) 2024 demand assumes 6% additional uplift due to Red Sea crisis with further upside potential 15.0%
Slide 30: Commercial Update
Commercial Update 30 30
Slide 31: Commercial: Key Messages
Commercial: Key Messages Capturing Upside Volatility Exploiting Market Complexity Relative Value Plays 31
Slide 32: Maximizing Global Trading Options
Maximizing Global Trading Options Servicing large, diversified base of high-quality customers on a global basis 32
Slide 33: Case Study I: Canal Disruption
Case Study I: Canal Disruption 33 Decisive response to event-specific impact Panama Suez • Combined $36,000 / day over 4.5 months • Owner’s option to proceed via Cape • 4:1 laden to ballast ratio • No TCE impact • 32.5% Increase in voyage duration Asia Pacific Freight (TC10) 90 80 Old Trade Flow 70
Slide 34: Case Study II: Global 25,000 DWT Chemical Rotation
Case Study II: Global 25,000 DWT Chemical Rotation 34 Seamless connection of varying commodities enables premium rotation Combined $29,150 / day Near ballast-free (95% laden) over 6 months Ballast Laden 34
Slide 35: Case Study III: Lucrative Drydock Positioning
Case Study III: Lucrative Drydock Positioning 35 Creative voyage strategies facilitated repositioning to China for drydockings Combined $37,500 / day 4:1 laden to ballast ratio over 4 months Ballast Laden 35
Slide 36: High-Value Term Charter Book
High-Value Term Charter Book Time charters (in / out) dynamically managed through the cycle Cumulative returns vs. spot TCE = $64mln since January 2021 6 $60,000 $50,000 4 $40,000 $30,000 2 No. of Vessels $20,000 TCE ($/day) 0 $10,000 $0 (2) -$10,000 MR on TC-In subsequently chartered out; total pro
Slide 37: Global Commercial Team
Global Commercial Team Diverse trading organization thriving in volatile markets ▪ ASC’s commercial team continues to deliver strong TCE performance while navigating complex environment o Trading and operations fully integrated providing seamless coverage across time zones o Direct customer access f
Slide 38: Contents
Contents 38 I. Earnings Presentation Fourth Quarter and Full Year 2023 II. Strategy Overview III. Market Outlook and Commercial Update IV. Summary V. Appendix 38
Slide 39: Conclusion: Where we are in the Cycle?
Conclusion: Where we are in the Cycle? 39 39
Slide 40: Thank You
Thank You 40 40
Slide 41: Contents
Contents 41 I. Earnings Presentation Fourth Quarter and Full Year 2023 II. Strategy Overview III. Market and Commercial Update IV. Summary V. Appendix 41
Slide 42: Ardmore Product and Chemical Tanker Rates
Ardmore Product and Chemical Tanker Rates 42 MR Eco-Des(1) Chemical(2) FLEET AVERAGE TCE $35,400 $32,542 $32,400 $30,100 $29,702 $29,314 $27,460 $27,874 $27,508 $26,541 $26,347 $26,107 $26,700 $24,555 $22,103 $20,023 2Q23 3Q23 4Q23 1Q24 TD 2Q23 3Q23 4Q23 1Q24 TD 2Q23 3Q23 4Q23 1Q24 TD 1. Basis MR Ec
Slide 43: EBITDA + vessel lease expense component (i.e. EBITDAR)
EBITDA + vessel lease expense component (i.e. EBITDAR) 43 Three months ended Twelve months ended Reconciliation of net income / (loss) to EBITDAR(1) December 31, 2023 December 31, 2023 In thousands of U.S. Dollars Net income 27,006 116,808 Interest income (555) (1,818) Interest expense and finance c
Slide 44: 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 45: Dividend Payment
Dividend Payment 45 ▪ In line with our consistent Dividend Policy, Ardmore is pleased to declare Dividend Calculation a quarterly cash dividend for 4Q 2023 of $0.21 per share Three Months Ended Dec 31, o Quarterly dividend calculated as one-third of adjusted earnings(1) 2023 Adjusted Earnings before
Slide 46: Refinery Summary and Seaborne Product Trade
Refinery Summary and Seaborne Product Trade 46 Regional Refinery Shift(1)(2) Region Closures 2020 - 2026 Openings 2023 - 2026 Europe 1.2 0.1 Australia 0.4 - Middle East - 0.5 Africa 0.2 1.0 America 1.8 0.6 China 1.0 1.0 Asia (excl. China) 1.7 6.0 Total (mbd) 6.3 9.2 Seaborne Product Trade Balances(3
Slide 47: Refinery Dislocation Boosting Tonne-Mile Demand
Refinery Dislocation Boosting Tonne-Mile Demand(1) 47 (1) 1. Closures based on announcement periods 47
Slide 48: Ardmore Indicative Guidance 1Q 2024
Ardmore Indicative Guidance 1Q 2024(1) 48 MR Eco-Design Spot TCE: $35,400 (60% fixed) Chemical Tanker Fleet TCE: $26,700 (70% fixed) Revenue Days: 2,260 Operating Expenses: $14.5 million Charter-In Expenses: $5.5 million Depreciation and Amortization: $8.5 million Overhead (Commercial and Corporate)