ARDMORE SHIPPING CORPORATION Second Quarter 2014 Earnings Presentation. July 29, 2014

Transcription

1 ARDMORE SHIPPING CORPORATION Second Quarter 2014 Earnings Presentation July 29, 2014

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 ability to enter into fixed-rate charters after the current charters expire and the Company s ability to earn income in the spot market, and expectations of the availability of vessels to purchase, 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"). 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 2

3 Agenda Highlights Corporate Update Product and Chemical Markets Financial Performance Summary Appendix 3

4 Highlights 4

5 Highlights Acquired three MR product and chemical tankers - Ardmore Endeavour, Ardmore Sealifter and Ardmore Sealeader Key Developments Completed a $39 million credit facility with Credit Agricole for two Eco-design chemical tankers under construction at Fukuoka Shipbuilding Increased the ABN AMRO, Nordea and SEB credit facility by $53 million to $225 million for three recent acquisitions Renewed a time charter for one Eco-design MR for ~7 months and renewed time charters for three Eco-mod MR s ships for an average period of ~7 months Fleet Update Ardmore Endeavour and Ardmore Sealifter commenced trading in the spot market in June 2014 and July 2014 respectively Ardmore Seafarer completed scheduled drydock on June 23, 2014 and Ardmore Seamaster completed scheduled drydock on July 25, 2014 Reported EBITDA (1) and net profit for 2Q 2014 of $5.0 million and $0.1 million respectively Financial Highlights (1) Adjusting for non-cash items adjusted EBITDA (1) and adjusted net profit (1) amounted to $5.3 million and $0.4 million respectively Declared a cash dividend of $0.10 per share for 2Q EBITDA, adjusted EBITDA and adjusted net profit are non-gaap measures. Reconciliations of such measures are included in the appendix of this presentation 5

6 Corporate Update 6

7 Acquisitions Acquired Three MR Product Tankers in 2Q14 MT Ardmore Endeavour Three attractive acquisitions in line with our focused strategy of MR product and mid-sized chemicals Ardmore Endeavour - 49,997 Dwt Eco-design product / chemical tanker Purchase price: $36 million Built July 2013 at STX Offshore & Shipbuilding Co. Ltd, Korea Delivered to Ardmore: June 25, 2014 MT Ardmore Sealifter Ardmore Sealifter - 47,472 Dwt product tanker Purchase price: $23 million Built July 2008 at Onomichi Dockyard Co. Ltd, Japan Delivered to Ardmore: July 22, 2014 TBN Ardmore Sealeader - 47,463 Dwt product tanker Purchase price: $23 million Built August 2008 at Onomichi Dockyard Co. Ltd, Japan Delivered to Ardmore: Est August 2014 TBN MT Ardmore Sealeader Acquisitions accretive to EPS and NAV $1 million increase in vessel values = $0.92 increase NAV / share (1) ships x $1 million = $24 million / 26.1 million shares = $0.92 / share 7

8 Chartering Employment Outlook 1Q 2014 A 2Q 2014 A 3Q 2014 E Operating Days 893 1,007 1,220 Drydock / Repositioning Days Revenue Days (1) ,182 Revenue Days Breakdown: Fixed TC Days Spot Days (2) Expected Revenue Days for 3Q14 MR Eco-design MR Eco-mod Chemical Q E TCE: ~$15, Q E TCE: ~$13, Q E TCE: ~$13,500 TC Days Spot Days TC Days Spot Days TC Days Spot Days 1. Revenue days for 3Q 2014 is based on 99.25% utilization 2. Spot days includes unfixed TC days 8

9 3 Delivery Schedule and Newbuilding Progress Newbuilding Programme Construction Progress 58% of fleet in operation upon delivery of the Ardmore Sealeader (expected in August 2014) HMD HULL H-2480 FKA HULL N-2062 HMD HULL H-2481 SPP HULL S-1162 Ardmore Cherokee (FKA N-2062) launched in Japan in July 2014 and expected to deliver in November 2014 FKA HULL N-2063 SPP HULL S-1163 SPP HULL S-1171 H-2480 and H-2481 expected to deliver in January 2015 FKA HULL N-2065 SPP HULL S-1172 FKA HULL N-2067 Completed To Complete Scheduled/Contracted Fleet Development (1) Q Q Q Q Q Q Q 2015 In Operation Predelivery 1. Assumes on time deliveries of all our vessels currently under construction 9

10 Product and Chemical Markets 10

11 Fleet million Dwt, start year Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Product Tanker Market Commentary PADD3 Refinery Utilization 2Q13 v 2Q14 PADD 3 utilization has a big impact on rates in Atlantic Basin Dropped significantly in 2Q14 (~84% in June 14) leading to decline in long haul exports Utilisation improvement in July (94.8% as of July 23, 2014) has driven rates from WS 70 up to WS 150 on TC14 Time charter market reflected spot weakness MR Eco-mods TC rates ~$13,750 / day - $14,500 / day MR Eco-designs TC rates ~$15,000 / day - $16,000 / day depending on charter structure 100% 95% 90% 85% 80% 75% 70% 2Q13 2Q14 Outlook remains positive GDP improvement and refinery developments Yanbu and Ruwais refineries in Middle East expected to open towards end of 2014 MR product tanker orderbook declining Orderbook: ~293 vessels or 17% of fleet based on Dwt 55 MR s delivered in vessels reported scrapped in same period Sale and Purchase Low level of activity Secondhand ship quality varies significantly Product Tanker Orderbook and Fleet Development 70% 60% 50% 40% 30% 20% 10% 0% Orderbook (% of Fleet) Source: Drewry, Clarksons Shipping Intelligence Network, internal market data 11

12 Fleet million Dwt, start year Chemical Tanker Market Commentary Chemical pool rates remain steady Our vessels continue to trade across CPP / Vegoil / Chemicals Ardmore Centurion performing well on time charter Chemical Vessels Cargo Split 2Q14 CPP 28% Considerable chartering interest in our newbuilding fleet U.S. petrochemical expansion driven by shale gas continues Exports from US Gulf expected to increase 45% by 2018 (3) Expect increased tonne mile demand Chemical tanker orderbook Approx 132 ships on order or 11% of fleet based on Dwt (1) Delivering 2014 to 2017 Delays expected for orders outside the core chemical shipyards in Japan and Korea Sale and Purchase Newbuilding ordering slowed in 2Q14 Second-hand activity limited Chemical Tanker Orderbook and Fleet Development (2) Chem / Vegoils 72% 70% 60% 50% 40% 30% 20% 10% 0% Orderbook (% of Fleet) Source: Drewry, Clarksons Shipping Intelligence Network, internal market data 1. Orderbook for coated IMO2 and stainless steel ships above 10,000 Dwt only 2. Clarksons Shipping Intelligence Network. Handy chemical tanker fleet development (start of period ) Excludes all IMO 3 tankers and IMO 2 tankers sized 30-60,000 dwt of MR product tanker design characteristics 3. American Chemistry Council 12

13 Financial Performance 13

14 Income Statement Income Statement Data INCOME STATEMENT DATA Three months ended Six months ended US$ millions, unless otherwise stated Jun 30, 2014 Jun 30, 2013 Jun 30, 2014 Jun 30, 2013 Results Revenue EBITDA (1) Net profit/(loss) 0.09 (1.19) (0.32) (1.23) Net earnings/(loss) per share ($/share) (0.148) (0.014) (0.153) Adjusted Results Adjusted EBITDA (1) Adjusted net profit/(loss) (1) 0.43 (0.65) 0.37 (0.69) Adjusted net earnings/(loss) per share ($/share) (1) (0.081) (0.086) OTHER OPERATING DATA Average Number of Vessels Fleet time charter equivalent per day ($/day) (2) 14,169 12,706 14,231 12,932 Fleet operating costs per day ($/day) (3) 6,122 6,056 6,138 6,081 Technical management fees per day ($/day) (4) EBITDA, adjusted EBITDA, adjusted net earnings/(loss) and adjusted net profit/(loss) per share are non-gaap measures. Reconciliations of such measures are included in Appendix II of this presentation 2. 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 3. Fleet operating costs per day are routine operating expenses and comprise, crewing, repairs and maintenance, insurance, stores, lube oils, 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 14

15 Financial Rates Improving Y-o-Y Time Charter Equivalent ($ / day) (1) For every $1,000/day increase in rates (2) : Operating Income ($mln) EPS Existing 24 Ship Fleet $8.71 $0.33 MR Tankers "Eco-Mod" MR Tankers Eco-Design Chemical Tankers $13,294 $13,732 $14,710 $15,089 $15,859 $10,483 $11,206 $9, Q Q Q 2014 Chemical Tankers "Eco-Mod" MR Tankers "Eco-Mod" MR Tankers "Eco-Design" Trip Charter Substantial Operating Leverage and Acquisitions will be Accretive to EPS 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) 2. Calculations based on existing cost structure and assume a fully-delivered fleet of 24 vessels, assumed utilization of 99.45% and 26.1 mln shares. Assumes no change in tax rate, cost of debt or share count. 15

16 Balance Sheet Selected Balance Sheet Data BALANCE SHEET DATA As at US$ millions, unless otherwise stated Jun 30, 2014 Dec 31, 2013 Cash Receivables, Inventories and Other Assets Vessels, Instalment Payments & Drydock Total Assets Payables and Accruals Debt & Capital Lease Obligations Equity Total Liabilities and Equity Debt / Debt + Equity 32.34% 33.90% Low Financial Leverage and every $1M increase in vessel values = $0.92 in NAV / share (1) ships x $1 million = $24 million / 26.1 million shares = $0.92 / share 16

17 Millions Financing Finance Update Completed a $39 million senior loan facility with Credit Agricole on May 22, 2014 for two chemical tankers currently under construction Increased the existing facility with ABN AMRO, Nordea and SEB by $53 million to $225 million on July 24, 2014 for three recent acquisitions In discussions on a credit facility for Ardmore Seamariner following which entire fleet, including vessels on order, will have debt finance in place Maintaining financial flexibility No Final Maturities Until 2018 $70 $60 $50 $40 $30 $20 $10 $

18 Summary 18

19 Summary Spot market experienced weakness in second quarter but near-term outlook has significantly improved Rate recovery in the Atlantic Basin on resumption of long haul exports from US Gulf Solid financial performance for the quarter EBITDA (1) of $5.0 mln and net profit of $0.1 mln Balanced fleet employment ensures cash-flow and earnings stability with upside exposure Continuing to expand in favorable conditions with acquisition of three high quality vessels Maintaining conservative financial profile; fleet fully financed Focused on building shareholder value and maximizing upside in market recovery Quarterly dividend of $0.10 per share Thank You 1. EBITDA is a non-gaap measures. Reconciliations of such measures are included in the appendix of this presentation 19

20 Appendix I. Fleet List II. Non-GAAP Measures 20

21 Appendix PRODUCT TANKERS NAME SIZE (DWT) DELIVERED BUILT IN OPERATION ARDMORE SEAVANGUARD 49, Korea ARDMORE SEAVANTAGE 49, Korea ARDMORE SEAVALIANT 49, Korea ARDMORE SEAVENTURE 49, Korea ARDMORE ENDEAVOUR 49, Korea ARDMORE SEATRADER 47, Japan ARDMORE SEAMASTER 45, Japan ARDMORE SEAFARER 45, Japan ARDMORE SEAMARINER 45, Japan ARDMORE SEALEADER (1) 47, Japan ARDMORE SEALIFTER 47, Japan ON ORDER SPP Hull S ,300 2Q15 Korea SPP Hull S ,300 3Q15 Korea SPP Hull S ,300 3Q15 Korea SPP Hull S ,300 4Q15 Korea TOTAL 15 Vessels 5 Years Average Age (2) CHEMICAL TANKERS NAME SIZE (DWT) DELIVERED BUILT IN OPERATION ARDMORE CENTURION 29, Korea ARDMORE CALYPSO 17, Korea ARDMORE CAPELLA 17, Korea ON ORDER HMD Hull H ,000 4Q14 Korea HMD Hull H ,000 1Q15 Korea FKA Hull N ,000 4Q14 Japan FKA Hull N ,000 1Q15 Japan FKA Hull N ,000 3Q15 Japan FKA Hull N ,000 4Q15 Japan TOTAL 9 Vessels 3 Years Average Age (2) 1. Expected delivery August Average age at December 31, 2015, after all vessels are delivered 21

22 Appendix Non-GAAP Measures (1) NON-GAAP MEASURES Three months ended Six months ended expressed in US$, unless otherwise stated Jun 30, 2014 Jun 30, 2013 Jun 30, 2014 Jun 30, 2013 EBITDA & Adjusted EBITDA Net profit/(loss) 94,745 (1,189,200) (318,707) (1,229,892) Interest income (8,278) (1,310) (10,300) (2,191) Interest expense and finance costs 1,000,036 1,400,413 1,890,022 1,942,949 Income tax 13,505 7,734 26,054 14,382 Depreciation 3,401,368 2,024,909 6,423,130 3,728,926 Amortization of deferred dry dock expenditure 514, , , ,422 EBITDA 5,015,629 2,608,072 8,966,037 5,168,596 Share based compensation (non-cash) 334,099 5, ,954 5,625 IPO related fees and expenses - 352, ,500 Adjusted EBITDA 5,349,728 2,966,197 9,653,991 5,526,721 Adjusted net loss Net profit/(loss) 94,745 (1,189,200) (318,707) (1,229,892) Share based compensation (non-cash) 334,099 5, ,954 5,625 Deferred finance fee write off (non-cash) - 179, ,816 IPO related fees and expenses - 352, ,500 Adjusted net profit/(loss) 428,844 (651,259) 369,247 (691,951) Adjusted earniings/(loss) per share, basic and diluted (0.081) (0.086) Weighted average number of shares, basic and diluted 26,100,000 8,049,764 22,996,409 8,049, EBITDA, adjusted EBITDA, adjusted net profit/(loss) and adjusted profit/(loss) per share are not measures prepared in accordance with U.S. GAAP. These Non-GAAP measures are presented in this presentation as we believe that they provide investors with a means of evaluating and understanding how Ardmore s management evaluate operating performance. These Non-GAAP measures should not be considered in isolation from, as substitutes for, or superior to financial measures prepared in accordance with U.S. GAAP 22