Ardmore Shipping Corporation · NYSE:ASC
Ardmore Shipping — Q2 2022 Earnings Presentation
27 slides from Ardmore Shipping's earnings presentation, Jul 27, 2022
Slide 1: Earnings Presentation Second Quarter 2022
Earnings Presentation Second Quarter 2022
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: Agenda
Earnings Release: Second Quarter 2022 3 Agenda ▪ Highlights and Market Developements ▪ Ardmore Performance ▪ Product and Chemical Tanker Fundamentals ▪ Financial Performance ▪ Summary 3
Slide 4: Highlights
Highlights 4 ▪ Product and chemical tanker markets continuing at historically high levels with many factors now contributing to ongoing momentum ▪ Our MRs(1) earned $30,500 / day for 2Q22 up from $15,900 last quarter; $46,600 in 3Q22 to-date, and $55,300 last two weeks’ fixtures. Chemical tankers ar
Slide 5: Product and Chemical Tanker Outlook
Product and Chemical Tanker Outlook 5 ▪ Product and chemical tanker market being influenced by many factors, Ardmore MR TCE Performance(1) above all a multi-faceted energy crisis $46,551 ▪ While concerns about inflation, rising interest rates, and a global economic slowdown should temper expectation
Slide 6: Ardmore Performance Update
Ardmore Performance Update 6 ▪ Our fleet employment strategy has optimally positioned the company to maximize earnings: o Deliberate move to 100% spot trading going into 2022 in anticipation of an improving market (but nobody anticipated the current strength) o Our fleet is technically 120% spot whe
Slide 7: Product and Chemical Tanker Fundamentals
Product and Chemical Tanker Fundamentals 7 7
Slide 8: Demand Fundamentals
Demand Fundamentals 8 ▪ Demand outlook for product and chemical tankers remains very positive: Oil Demand: Continued Growth in Medium-term(1) 105 104.1 103.2 o Global oil demand is expected to increase by 1.7 mbd this year and 2.1 102.3 mbd in 2023 in spite of the deceleration of global economic act
Slide 9: Supply Fundamentals
Supply Fundamentals 9 ▪ Supply outlook for product and chemical tankers is also favorable, driven Product and Chemical Tanker Est. Net Fleet Growth(1)(2)(3)4) by a low orderbook and increased scrapping levels 4.5% 3.9% 4.0% 3.5% 3.5% ▪ Net fleet growth (deliveries less scrapping) is expected to be w
Slide 10: Operating and Financial Performance
Operating and Financial Performance 10 10
Slide 11: Fleet and Operational Highlights
Fleet and Operational Highlights ▪ Continuing to invest in the fleet to optimize operating performance: Capex Schedule: Drydocking and BWTS(1) $3.0 o Expect to complete one drydocking and ballast water treatment system $2.4 Total Capex (Million USD) installation in 4Q22 with total capex of $2.4 mill
Slide 12: Financial Highlights
Financial Highlights ▪ Reporting earnings of $28.8 million, or $0.82 per share for 2Q22, INCOME STATEMENT DATA Three Months Ended representing our strongest quarter to date US$ millions, unless otherwise Jun 30, Mar 31, Jun 30, stated 2022 2022 2021 ▪ MRs averaged $30,500 / day(1)(2) for 2Q22 vs. $1
Slide 13: Ardmore Product and Chemical Tanker Rates
Ardmore Product and Chemical Tanker Rates(1) 13 FLEET AVERAGE TCE MR ECO-DES CHEMICAL(2) $46,551 $43,307 $32,921 $30,480 $27,806 $21,970 $15,850 $20,254 $15,155 $13,964 $14,801 $11,796 $11,805 $12,217 $11,390 $11,051 $11,614 $10,319 $13,645 $12,308 $8,916 $11,274 $8,400 Capital Adjusted TCE 2Q21 3Q2
Slide 14: Ardmore Has Significant Operating Leverage (Illustrative)
Ardmore Has Significant Operating Leverage (Illustrative) 14 $12.0 Average Fleet TCE $361.8 3Q22 Run Rate $360 $313.6 $330 $10.0 $9.75 $300 $265.3 $8.45 Average Fleet TCE $270 $8.0 2Q22 Net Income (Million USD) $7.15 $240 $217.1 Annual EPS $210 $5.85 $6.0 $168.8 $180 $4.55 $150 $120.6 $4.0 $3.25 $12
Slide 15: Complete Refinancing of Debt, Reducing Interest Expense
Complete Refinancing of Debt, Reducing Interest Expense 15 ▪ Complete refinancing of our debt facilities with our existing banks in Balance Sheet Summary 2Q22 for three separate loans for $308 million (aggregate) to refinance US$ millions, unless otherwise stated June 30, 2022 Dec 31, 2021 19 vessel
Slide 16: Capital Allocation Policy
Capital Allocation Policy 16 ▪ Capital Allocation Policy was introduced in March 2020: o Overall objective is to build shareholder value in a highly cyclical industry o Policy designed to ensure Ardmore is well-positioned to capitalize on opportunities through the cycle and developments in the indus
Slide 17: Summary
Summary 17 17
Slide 18: Summary
Summary 18 ▪ MR charter rates now at levels offering impressive returns on investment: earnings of $28.8 million or $0.82 EPS for 2Q22, representing an annualized ROE(1) of about 40% and potential earnings of $65 million or $1.75 EPS for 3Q22, an annualized ROE of about 90% ▪ Market being influenced
Slide 19: Appendix
Appendix 19 19
Slide 20: EBITDA + vessel lease expense component (i.e. EBITDAR)
EBITDA + vessel lease expense component (i.e. EBITDAR) 20 Three months ended Reconciliation of net income / (loss) to EBITDAR(1) June 30, 2022 In thousands of U.S. Dollars Net Income / (Loss) 29,687 Interest income (20) Interest expense and finance costs 4,894 Income tax 9 Unrealized gains on deriva
Slide 21: Refinery Dislocation Boosting Tonne-Mile Demand
Refinery Dislocation Boosting Tonne-Mile Demand(1)(2) 21 (3) 1. See slide 22 for illustrative tonne-mile impact of refinery dislocation 2. See slide 26 for further detail on refineries 3. Closures based on announcement periods; some closures to physically happen in 2023 21
Slide 22: Impact of Refinery Dislocation
Impact of Refinery Dislocation 22 1. “Refinery shift” means closure of refinery in one location (e.g., Europe or Australia) and opening of refinery in another location (e.g., Middle East or China) 2. An MR can carry approx. 300,000 barrels of refined products. Assumes voyage length of 30 days on a o
Slide 23: Fleet Profile
Fleet Profile High Quality Vessels Vessel Name Type Dwt Tonnes IMO Built Country Flag Specification Ardmore Seavaliant Product/Chemical 49,998 2/3 Feb-13 Korea MI Eco-Design ✓ Modern, highly fuel-efficient fleet Ardmore Seaventure Product/Chemical 49,998 2/3 Jun-13 Korea MI Eco-Design of MRs is well
Slide 24: Supplementary Industry Data
Supplementary Industry Data 24 24
Slide 25: Refinery Summary and Seaborne Product Trade
Refinery Summary and Seaborne Product Trade 25 Regional Refinery Shift(1) Region Closures 2020 - 2024 Openings 2022 - 2026 Europe 1.2 0.1 Australia 0.5 - Middle East - 1.0 Africa 0.2 0.9 America 1.6 0.3 China 0.7 1.0 Asia (excl. China) 1.7 5.6 Total (mbd) 5.9 8.9 Seaborne Product Trade Balances(2) 2
Slide 26: Refinery Development Details
Refinery Development Details 26 Global Refinery Openings(1) Global Refinery Closures(1) Capacity Capacity Refinery Status Country Date Refinery Status Country Date (bpd) (bpd) Rongsheng Opened China 2020 200,000 Kwinana (BP) Indefinite closure Australia 2020 (146,000) Lianyungang Opened China 2021 3
Slide 27: Supply Growth Remains Constrained
Supply Growth Remains Constrained Chemical Tanker Orderbook(1)(2) Product Tanker Scrapping in 2022(1) 40 80% 80 6.3% 68 35 70% 70 53 58 30 60% 60 53 50 Orderbook as % Fleet 50 Fleet (million DWT) 25 50% 39 20 40% 40 34 30 27 15 30% 23 21 20 10 20% 20 5 10% 10 - - - 1996 1998 2000 2002 2004 2006 2008