American Shipping Company ASA Presentation of Q2 2018 23 August 2018
Important information Nothing herein shall create any implication that there has been no change in the affairs of American Shipping Company ASA ("AMSC" or the "Company") as of the date of this Company Presentation. This Company Presentation contains forward-looking statements relating to the Company's business, the Company's prospects, potential future performance and demand for the Company's assets, the Jones Act tanker market and other forward-looking statements. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words "believes", "expects", "predicts", "intends", "projects", "plans", "estimates", "aims", "foresees", "anticipates", "targets", and similar expressions. The forward-looking statements contained in this Company Presentation, including assumptions, opinions and views of the Company or cited from third party sources, are solely opinions and forecasts which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development.
Second Quarter 2018 Highlights Adjusted net profit of USD 1.6 million* Normalized EBITDA** of USD 21.5 million No profit share DPO of USD 0.9 million Declared Q2 dividend of USD 0.08 per share, consistent with prior guidance Ex-dividend date of 29 August 2018 with payment on or about 7 th September 2018 Classified as a return of paid in capital Improved market conditions for Jones Act tankers Crude volumes to U.S. Northeast remain strong Seasonal reduction in spot activity towards the end of second quarter, mitigated by continued increased demand for time charter contracts Accelerated scrapping and limited supply growth going forward * Net profit after tax, adjusted for non-recurring items, currency fluctuations, mark-to-market of derivatives and changes to deferred tax ** Includes DPO, reported EBITDA for Q2 18 is USD 20.6 million 3
Stable, Predictable EBITDA Normalized EBITDA* (USD millions) Normalized EBITDA* per quarter (USD millions) 100 90 80 70 60 50 40 30 20 10 0 6 11 10 1 3 4 4 85 85 85 85 2014 2015 2016 2017 Profit Share DPO Reported EBITDA 26 24 22 20 18 16 14 12 10 8 6 4 2 0 3 1 3 4 3 1 1 2 1 1 1 1 1 1 1 1 1 1 1 1 21 21 22 21 21 21 21 21 21 21 21 21 21 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Profit Share DPO Reported EBITDA Normalized EBITDA* of USD 21.5 million in Q2 18 (USD 22.2 million in Q2 17) No profit share in Q2 18 or Q2 17 DPO of USD 0.9 in Q2 18 (USD 0.9 million in Q2 17) * Including Profit Share (except 2017 where profit share was 0 for the full year) and DPO. Reported EBITDA for Q2 18 is USD 20.6 million 4
Fleet Deployment Overview Long-term fixed rate bareboat charters to OSG secures cash flow Vessel 2017-19 2019 - beyond End users Anacortes Boston Houston AMSC s fleet is on firm BB Charters to OSG until December 2019* plus evergreen extension options Long Beach Los Angeles Martinez AMSC receives fixed annual bareboat revenue of USD 88 million + ~50% of the profits generated by OSG under the time charter contracts New York Nikiski Texas City OSG time charters the vessels to oil majors for U.S domestic trade Tampa * Opt. * All vessels excluding Overseas Tampa which is contracted to June 2025 5
A Critical Part of Oil Majors Transportation Logistics Jones Act crude oil & products primary trade routes BAKKEN 3 Patoka, IL 5 2 PERMIAN Key US Oilfields EAGLE FORD 4 Key Pipeline / rail Barges Corpus Christi 6 1 1 US GULF Jones Act Tanker Routes: 1 Gulf Coast refineries to Florida and East Coast (Clean) 2 Mid-Atlantic to New England (Clean) 3 Alaska and Intra-west coast movements (Clean/Dirty) 5 Delaware Bay Lightening (Crude) 6 Shuttle tankers from deep water U.S. Gulf to Gulf Coast Refineries (Crude) 7 Crude from Corpus Christi, TX to LOOP (not shown) 4 Cross-Gulf movements (Dirty) 6
Majority of Fleet carry Clean Products Jones Act tanker fleet deployment by main trades (Tankers and ATBs) 1 % 24 % 3 % 8 % 18 % Idle MSC Chemicals West Coast Clean USG Crude Oil 46 % Source: Navigistics Wilson Gillette Report, Apr 2018 and AMSC analysis 7
Increasing Clean Product Volumes Seaborne products transport from Gulf Coast to East Coast is rising (Mbbls per month) 25 20 15 10 Sources: EIA 8 Jan 2010 Mar 2010 May 2010 Jul 2010 Sep 2010 Nov 2010 Jan 2011 Mar 2011 May 2011 Jul 2011 Sep 2011 Nov 2011 Jan 2012 Mar 2012 May 2012 Jul 2012 Sep 2012 Nov 2012 Jan 2013 Mar 2013 May 2013 Jul 2013 Sep 2013 Nov 2013 Jan 2014 Mar 2014 May 2014 Jul 2014 Sep 2014 Nov 2014 Jan 2015 Mar 2015 May 2015 Jul 2015 Sep 2015 Nov 2015 Jan 2016 Mbbl May 2016 Jul 2016 Mar 2016 Sep 2016 Nov 2016 Jan 2017 Mar 2017 May 2017 Jul 2017 Sep 2017 Nov 2017 Jan 2018 Mar 2018 May 2018 East Coast (PADD 1) receipts by Tanker and Barge from Gulf (PADD 3)
Crude Shipping Volumes Stabilizing Intra Gulf whilst Returning to Peak Levels on East Coast Intra PADD 3 Crude Oil Moves by Area of Loading, (KBD s) PADD 3 to PADD 1 Crude Oil Moves by Tanker and Barge (Mbbls per month, 3month rolling averages) 4 3 Mbbl 2 1 0 Jan 2013 Mar 2013 May 2013 Jul 2013 Sep 2013 Nov 2013 Jan 2014 Mar 2014 May 2014 Jul 2014 Sep 2014 Nov 2014 Jan 2015 Mar 2015 May 2015 Jul 2015 Sep 2015 Nov 2015 Jan 2016 Mar 2016 May 2016 Jul 2016 Sep 2016 Nov 2016 Jan 2017 Mar 2017 May 2017 Jul 2017 Sep 2017 Nov 2017 Jan 2018 Mar 2018 May 2018 Jul 2018 PADD 3 to PADD 1 Tanker Crude Oil Movements (3 month rolling average) JA USG loading of 600m bbls per day utilizes ~9 vessels for USG crude trade (assuming 5 days roundtrip) Volumes poised to recover Source: ClipperData March 2018, EIA, Marine Traffic and AMSC analysis Volumes in East Coast trade is back to ~5 tankers, up from ~1 tanker during 2017 Volumes driven by spread in pricing of US oil vs international alternatives - WTI Houston vs. Bonny Light 9
Oil Price Spread - Key Driver for Increase in PADD 3 to PADD 1 Crude Shipping Volumes 10 PADD 3 to PADD 1 Crude Oil Moves by Number of Tanker Liftings 9 8 7 6 5 4 3 2 1 0 Crude Oil Price Spread - WTI Houston vs. Bonny Light 6.00 5.00 4.00 3.00 2.00 1.00 0.00 1.00 Jan 2017 Apr 2017 Jul 2017 Oct 2017 Jan 2018 Apr 2018 Jul 2018 Record 9 monthly voyages in Jun 18 and 8 by late August (in transit or delivered) ~ 5 tankers absorbed in activity from U.S. Gulf up to North East refineries Crude loaded in Houston vs. West Africa needs to be minimum $1.50 cheaper to be competitive for U.S. Eastcoast Refiners Spread has been sufficiently wide since Aug/Sept 2017 Source: Argus and Marine Traffic 10
Limited Remaining Fleet Growth and Scrapping Continues (3x units YTD 2018) Fleet profile by vessel age Considerable fleet growth over the last 3 years, but scrapping likely to bring fleet back to 2015 levels # vessels 11 10 Scrap/lay up ATBs Tankers AMSC Kbbls Capacity 30000 Actual Projected 9 25000 8 2015 levels 7 6 5 Candidates for scrapping 20000 15000 4 3 10000 2 1 5000 0 50 45 40 35 30 25 20 15 10 5 1 0 2012 2013 2014 2015 2016 2017 2018 2019 Fleet Scrapping Source: Navigistics Wilson Gillette Report Apr 2018, broker reports and AMSC analysis 11
Income Statement (unaudited) Figures in USD million (except share and per share information) Q2 2018 Q2 2017 Operating revenues 21.9 21.9 Operating expenses (1.3) (0.6) Operating profit before depreciation - EBITDA 20.6 21.3 Depreciation (8.4) (8.5) Operating profit - EBIT 12.2 12.7 Gain on investments - - Net interest expense (10.4) (10.3) Unrealized gain/(loss) on interest swaps 0.5 (0.9) Net foreign exchange gain/(loss) - - Profit/(loss) before income tax 2.3 1.6 Income tax expense (0.2) - Non-cash income tax expense (0.1) (0.2) Net profit / (loss) for the period * 2.0 1.4 Average number of common shares 60,616,505 60,616,505 Earnings/(loss) per share (USD) 0.03 0.02 *Applicable to common stockholders of the parent company 12
Balance Sheet (unaudited) Figures in USD millions 30.06.2018 30.06.2017 Vessels 728.8 762.5 Interest-bearing long term receivables (DPO) 27.7 29.7 Other non current assets 16.4 15.3 Derivative financial assets 4.0 - Trade and other receivables 0.2 1.6 Cash held for specified uses 2.8 2.2 Cash and cash equivalents 51.3 51.0 TOTAL ASSETS 831.2 862.3 Total equity 183.0 183.1 Deferred tax liabilities 12.2 19.4 Interest-bearing long term debt 587.2 613.2 Derivative financial liabilities - 0.3 Interest-bearing short term debt 28.3 28.3 Deferred revenues and other payables 20.5 18.0 TOTAL EQUITY AND LIABILITIES 831.2 862.3 13
Cash position increased during the quarter CASH DEVELOPMENT IN 2Q 18 (USD millions) 4.5 48.5 20.6 7.1 4.8 1.4 54.1 OB Cash EBITDA Interest Amortization Dividends Other CB Cash 14
Investment Highlights Highlights Comments INCREASED DEMAND IN KEY TRADES Increased crude shipments from U.S. Gulf to the U.S. Northeast Intra gulf volumes crude stabilizing Steady clean trade into Florida LIMITED NEW VESSEL ORDERS Final MR tanker delivered and one smaller ATBs entering the market in 2018 Only new orders are 1+1 ATB for delivery in Q2-2020 Scrapping / lay-up of older tonnage continues LEADING MARKET POSITION WITH STABLE CASH FLOWS AMSC has the most cost efficient modern Jones Act tanker fleet Stable cash flow from fixed rate bareboat contracts and upside potential from profit share arrangement Committed to returning capital to shareholders through dividends, whilst prudently managing the balance sheet and maintaining financial flexibility 15