Ardmore Shipping Corporation Announces Financial Results For The Three And Nine Months Ended September 30, 2019
HAMILTON, Bermuda, Nov. 5, 2019 /PRNewswire/ -- Ardmore Shipping Corporation (NYSE: ASC) ("Ardmore", the "Company" or "we") today announced results for the three and nine months ended September 30, 2019.
Highlights and Recent Activity
-- Reported a GAAP net loss (and net loss from continuing operations - see
Non-GAAP Measures Section) of $5.7 million for the three months ended
September 30, 2019, or $0.17 loss per basic and diluted share, as
compared to a GAAP net loss of $12.2 million, or $0.37 loss per basic
and diluted share, for the three months ended September 30, 2018. The
Company reported adjusted EBITDA (see Non-GAAP Measures section) of $9.6
million for the three months ended September 30, 2019, as compared to
$3.9 million for the three months ended September 30, 2018.
-- Reported a net loss from continuing operations (see Non-GAAP Measures
section) of $11.6 million for the nine months ended September 30, 2019,
or $0.35 net loss from continuing operations per basic and diluted
share, as compared to a net loss from continuing operations of $25.6
million, or $0.78 net loss from continuing operations per basic and
diluted share, for the nine months ended September 30, 2018.
-- Reported a GAAP net loss of $24.8 million for the nine months ended
September 30, 2019, or $0.75 loss per basic and diluted share, as
compared to a GAAP net loss of $26.0 million, or $0.79 loss per basic
and diluted share, for the nine months ended September 30, 2018. GAAP
net loss for the nine months ended September 30, 2019 includes the loss
on the sales of the Ardmore Seamaster and Ardmore Seafarer. GAAP net
loss for the nine months ended September 30, 2018 includes the write-off
of deferred finance fees in relation to refinancing. The Company
reported adjusted EBITDA (see Non-GAAP Measures section) of $35.4
million for the nine months ended September 30, 2019, as compared to
$21.3 million for the nine months ended September 30, 2018.
-- MR tankers earned an average TCE rate of $13,784 per day for the three
months ended September 30, 2019, and $14,601 per day for the nine months
ended September 30, 2019. Chemical tankers earned an average TCE rate of
$11,013 per day for the three months ended September 30, 2019, and an
average of $11,784 per day for the nine months ended September 30, 2019.
-- Charter rates rebounded in recent weeks with rates for MRs fixed since
October 5, 2019 averaging approximately $20,085 per day. Taking account
of voyages in progress from the third quarter, as of November 5, 2019,
the Company has fixed approximately 45% of its total MR spot revenue
days for the fourth quarter of 2019 at an average TCE rate of
approximately $17,000 per day.
-- Agreed terms for two credit facilities for $201.5 million, in the
aggregate including a $40 million revolving component, with our close
relationship banks to refinance twelve ships on improved terms and
extending maturities until the end of 2024.
-- The Company is maintaining its dividend policy of paying 60% of earnings
from continuing operations. Consistent with this policy, the Company is
not declaring a dividend for the third quarter of 2019.
Anthony Gurnee, the Company's Chief Executive Officer, commented:
"After three difficult years for the tanker sector, we are very encouraged by the recent sharp upturn in the tanker market and the drivers behind. We believe that this is likely to be the beginning of a sustained upcycle, characterized by repetitive spikes with settling periods in between, but at levels well above the recent past.
We think that conditions are now in place for a strong rate environment in particular for product tankers. We believe that IMO 2020 is now having a significant impact on product tanker demand and rates; in particular, demand for gasoil is expected to surge as shipping companies transition to compliant fuels and concerns about VLSFO quality and compatibility issues prevail, resulting in elevated trading activity. At the same time, we expect that geopolitical tensions in the Middle East and an anticipated winter seasonal demand boost will further contribute to a strong rate environment in the near-term.
Looking beyond the near-term, the underlying fundamentals of product tanker supply and demand are solid and should get even better: oil consumption growth is expected to increase to 1.2mbd in 2020 and ongoing refinery expansion in export-oriented location should further amplify fundamental demand growth. Meanwhile, a record low orderbook, combined with ongoing scrapping should keep vessel supply growth well below demand growth for the foreseeable future. We also believe that regulatory uncertainty around the global maritime industry's targets for greenhouse gas ("GHG") emissions reductions will put a damper on newbuilding activity until rules and regulations become clear and new technologies emerge, which could take years.
We are pleased to present our CO(2) emissions again this quarter. While the industry is continuing to refine reporting methodology for carbon emissions, we believe that a commitment to increased transparency by companies such as Ardmore will play an important role in encouraging positive and sensible legislative change toward GHG emissions reductions from the shipping industry.
In the midst of these positive developments, we remain resolutely focused on operating performance and effective capital allocation to maximize returns. With a modern, fuel efficient fleet of MR product & chemical tankers and cost-efficient structure, we believe we are poised to take advantage of improved market conditions, to recommence dividend payments as per our policy, and to generate strong returns for our shareholders."
Summary of Recent and Third Quarter 2019 Events
Fleet
Fleet Operations and Employment
As at September 30, 2019, the Company had 25 vessels in operation, including 19 Eco MR tankers ranging from 45,000 deadweight tonnes (Dwt) to 49,999 Dwt (15 Eco-Design and four Eco-Mod) and six Eco-Design IMO 2 product / chemical tankers ranging from 25,000 Dwt to 37,800 Dwt.
MR Tankers (45,000 Dwt - 49,999 Dwt)
At the end of the third quarter of 2019, the Company had 19 Eco MR tankers trading in the spot market. The Eco MR tankers earned an average TCE rate of $13,784 per day in the third quarter of 2019. The Company's 15 Eco-Design MR tankers earned an average TCE rate of $13,993 per day, and the Company's four Eco-Mod MR tankers earned an average TCE rate of $12,438 per day.
In the fourth quarter of 2019, the Company expects to have all revenue days for its MR Eco-Design and MR Eco-Mod tankers employed in the spot market. As of November 5, 2019, the Company had fixed approximately 45% of its total MR spot revenue days for the fourth quarter of 2019 at an average TCE rate of approximately $17,000 per day.
Product / Chemical Tankers (IMO 2: 25,000 Dwt - 37,800 Dwt)
At the end of the third quarter of 2019, the Company had six Eco-Design IMO 2 product / chemical tankers in operation, all of which were trading in the spot market. During the third quarter of 2019, the Company's six Eco-Design product / chemical vessels earned an average TCE rate of $11,013 per day.
In the fourth quarter of 2019, the Company expects to have all revenue days for its Eco-Design IMO 2 product / chemical tankers employed in the spot market. As of November 5, 2019, the Company had fixed approximately 40% of its Eco-Design IMO 2 product / chemical tankers spot revenue days for the fourth quarter of 2019 at an average TCE rate of approximately $13,000 per day.
Financing
Agreed terms for two new credit facilities for $201.5 million in the aggregate with our close relationship banks. The first facility is a $140 million term loan and incorporates $40 million revolving component. The proceeds from this facility will be used to refinance eight ships. The second facility is a $61.5 million term loan and proceeds will be used to refinance four ships. The total cash released on the refinancing is $15.8 million in the aggregate. These financings strengthen the Company's financial flexibility through the incorporation of a revolving component in one of the facilities, extending debt maturities to the end of 2024 and lowering the Company's cost of debt. The covenants and other conditions of the facilities are consistent with those of Ardmore's existing debt facilities. Ardmore expects to complete documentation and close both financings in the fourth quarter of 2019.
Drydocking
The Company had 22 drydock days, including repositioning days, in the third quarter of 2019 in respect of one drydocking. Ardmore expects it will have 15 drydock days, including repositioning days, in the fourth quarter of 2019.
Dividend
Based on the Company's policy of paying dividends equal to 60% of earnings from continuing operations, the Company's Board of Directors has not declared a dividend for the quarter ended September 30, 2019, in which the Company reported a loss from continuing operations. Earnings from continuing operations is defined as earnings per share reported under U.S. GAAP, as adjusted for unrealized and realized gains and losses and extraordinary items.
Results for the Three Months Ended September 30, 2019 and 2018
The Company reported a GAAP net loss of $5.7 million for the three months ended September 30, 2019, or $0.17 loss per basic and diluted share, as compared to a GAAP net loss of $12.2 million, or $0.37 loss per basic and diluted share, for the three months ended September 30, 2018. The Company reported EBITDA (see Non-GAAP Measures section) of $9.6 million for the three months ended September 30, 2019, as compared to $3.9 million for the three months ended September 30, 2018.
The Company reported a net loss from continuing operations (see Non-GAAP Measures section) of $5.7 million for the three months ended September 30, 2019, or $0.17 net loss from continuing operations per basic and diluted share, as compared to a net loss from continuing operations of $12.2 million, or $0.37 net loss from continuing operations per basic and diluted share, for the three months ended September 30, 2018. The Company reported adjusted EBITDA (see Non-GAAP Measures section) of $9.6 million for the three months ended September 30, 2019, as compared to $3.9 million for the three months ended September 30, 2018.
Results for the Nine Months Ended September 30, 2019 and 2018
The Company reported a GAAP net loss of $24.8 million for the nine months ended September 30, 2019, or $0.75 loss per basic and diluted share, as compared to a GAAP net loss of $26.0 million, or $0.79 loss per basic and diluted share, for the nine months ended September 30, 2018. The Company reported EBITDA (see Non-GAAP Measures section) of $22.3 million for the nine months ended September 30, 2019, as compared to $21.3 million for the nine months ended September 30, 2018.
The Company reported a net loss from continuing operations (see Non-GAAP Measures section) of $11.6 million for the nine months ended September 30, 2019, or $0.35 net loss from continuing operations per basic and diluted share, as compared to a net loss from continuing operations of $25.6 million, or $0.78 net loss from continuing operations per basic and diluted share, for the nine months ended September 30, 2018. The Company reported adjusted EBITDA (see Non-GAAP Measures section) of $35.5 million for the nine months ended September 30, 2019, as compared to $21.3 million for the nine months ended September 30, 2018.
Management's Discussion and Analysis of Financial Results for the Three Months Ended September 30, 2019 and 2018
Revenue. Revenue for the three months ended September 30, 2019 was $52.1 million, an increase of $3.2 million from $48.9 million for the three months ended September 30, 2018.
The Company's average number of owned vessels decreased to 25.0 for the three months ended September 30, 2019, from 28.0 for the three months ended September 30, 2018, resulting in revenue days of 2,276 for the three months ended September 30, 2019, as compared to 2,471 for the three months ended September 30, 2018.
The Company had 25 and 28 vessels employed directly in the spot market as at September 30, 2019, and September 30, 2018, respectively. For spot chartering arrangements, the Company had 2,276 revenue days for the three months ended September 30, 2019 as compared to 2,288 for the three months ended September 30, 2018. This decrease in revenue days derived from spot chartering arrangements resulted in a decrease in spot market revenue of $0.2 million, while changes in spot rates resulted in an increase in revenue of $4.8 million.
The Company had zero vessels employed under third-party pool arrangements as at September 30, 2019, and September 30, 2018. Revenue days derived from pool arrangements were zero for the three months ended September 30, 2019, as compared to 183 for the three months ended September 30, 2018. Removing all vessels from third-party pool arrangements during 2018 resulted in a decrease in pool revenue of $1.4 million for the three months ended September 30, 2019.
For vessels employed directly in the spot market, the Company typically pays all voyage expenses, and revenue is recognized on a gross freight basis, while under time chartering and pool arrangements, the charterer typically pays voyage expenses and revenue is recognized on a net basis.
Commissions and Voyage Expenses. Commissions and voyage expenses were $22.9 million for the three months ended September 30, 2019, a decrease of $1.5 million from $24.4 million for the three months ended September 30, 2018. Commissions costs have increased in line with the increase in revenue; however, this has been offset by a decrease in voyage expenses due to the decrease in the average number of owned vessels of 25.0 for the three months ended September 30, 2019, compared to 28.0 for the three months ended September 30, 2018.
TCE Rate. The average TCE rate for the Company's fleet was $13,029 per day for the three months ended September 30, 2019, an increase of $2,768 per day from $10,261 per day for the three months ended September 30, 2018. The increase in average TCE rate was the result of higher spot rates and lower commissions and voyage expenses for the three months ended September 30, 2019. TCE rates represent net revenues (or revenue less commission and voyage expenses) divided by revenue days.
Vessel Operating Expenses. Vessel operating expenses were $14.9 million for the three months ended September 30, 2019, a decrease of $1.4 million from $16.3 million for the three months ended September 30, 2018. This decrease is due to a decrease in the average number of vessels in operation for the three months ended September 30, 2019, and the timing of vessel operating expenses between quarters. Vessel operating expenses, by their nature, are prone to fluctuations between periods. Average fleet operating expenses per day, including technical management fees, were $6,194 for the three months ended September 30, 2019, as compared to $6,176 for the three months ended September 30, 2018.
Depreciation. Depreciation expense for the three months ended September 30, 2019 was $8.0 million, a decrease of $0.9 million from $8.9 million for the three months ended September 30, 2018. This decrease is primarily due to a decrease in the average number of owned vessels to 25.0 for the three months ended September 30, 2019, from 28.0 for the three months ended September 30, 2018.
Amortization of Deferred Drydock Expenditure. Amortization of deferred drydock expenditure for the three months ended September 30, 2019 was $1.2 million, an increase of $0.3 million from $0.9 million for the three months ended September 30, 2018. The increase is primarily due to an increased number of drydockings as the Company's fleet ages. The capitalized costs of drydockings for a given vessel are amortized on a straight-line basis to the next scheduled drydocking of the vessel.
General and Administrative Expenses: Corporate. Corporate-related general and administrative expenses for the three months ended September 30, 2019 were $3.9 million, an increase of $0.5 million from $3.4 million for the three months ended September 30, 2018. The increase is primarily due to the issuance of new awards of stock appreciation rights and restricted stock units in the first and second quarters of 2019.
General and Administrative Expenses: Commercial and Chartering. Commercial and chartering expenses are the expenses attributable to the Company's chartering and commercial operations departments in connection with the Company's spot trading activities. Commercial and chartering expenses for the three months ended September 30, 2019 were $0.8 million, a decrease of $0.2 million from $1.0 million for the three months ended September 30, 2018. This decrease is primarily due to a decrease in staff costs due to headcount reduction in the third quarter of 2019.
Interest Expense and Finance Costs. Interest expense and finance costs include loan interest, finance lease interest, and amortization of deferred finance fees. Interest expense and finance costs for the three months ended September 30, 2019 were $6.3 million, consistent with $6.3 million for the three months ended September 30, 2018. Cash interest expense increased by $0.1 million to $5.8 million for the three months ended September 30, 2019, from $5.7 million for the three months ended September 30, 2018. The consistency in interest expense and finance costs period-over-period is attributable to a decreased average LIBOR during the three months ended September 30, 2019 compared to the three months ended September 30, 2018, offset by a change in our debt structure due to new finance leases entered into as part of vessel financing transactions during 2018. Amortization of deferred finance fees for the three months ended September 30, 2019 was $0.5 million, a decrease of $0.1 million from $0.6 million for the three months ended September 30, 2018.
Liquidity
As of September 30, 2019, the Company had $46.2 million (December 31, 2018: $56.9 million) available in cash and cash equivalents. The following debt and lease liabilities (net of deferred finance fees) were outstanding as at the dates indicated:
As at
Sep 30, 2019
Dec 31, 2018
Debt $203,276,304 $228,354,248
Finance leases 220,098,782 241,476,098
Operating leases 1,538,898 1,968,654
Total $424,913,984 $471,799,000
Conference Call
The Company plans to have a conference call on Tuesday, November 5, 2019 at 10:00 a.m. Eastern Time to discuss its results for the quarter ended September 30, 2019. All interested parties are invited to listen to the live conference call and slide presentation by choosing from the following options:
1. By dialing 844-492-3728 (U.S.) or 412-542-4189 (International) and
referencing "Ardmore Shipping."
2. By accessing the live webcast at Ardmore Shipping's website at
www.ardmoreshipping.com.
Participants should dial into the call 10 minutes before the scheduled time.
If you are unable to participate at this time, an audio replay of the call will be available through November 12, 2019 at 877-344-7529 or 412-317-0088. Enter the passcode 10136638 to access the audio replay. A recording of the webcast, with associated slides, will also be available on the Company's website. The information provided on the teleconference is only accurate at the time of the conference call, and the Company will take no responsibility for providing updated information.
About Ardmore Shipping Corporation
Ardmore owns and operates a fleet of MR product and chemical tankers ranging from 25,000 to 50,000 deadweight tonnes. Ardmore provides seaborne transportation of petroleum products and chemicals worldwide to oil majors, national oil companies, oil and chemical traders, and chemical companies, with its modern, fuel-efficient fleet of mid-size product and chemical tankers.
We are strategically focused on modern, fuel-efficient, mid-size product and chemical tankers. We actively pursue opportunities to exploit the overlap we believe exists between the clean petroleum product ("CPP") and chemical sectors in order to enhance earnings, and also seek to engage in more complex CPP trades, such as multi-grade and multi-port loading and discharging operations, where our knowledge of chemical operations is beneficial to our CPP customers. Our fuel-efficient operations are designed to enhance our investment returns and provide value-added service to our customers. We believe we are at the forefront of fuel efficiency and emissions reduction trends and are well positioned to capitalize on these developments with our fleet of Eco-design and Eco-mod vessels. Our acquisition strategy is to continue to build our fleet with Eco-design newbuildings and modern second-hand vessels that can be upgraded to Eco-mod. We have a resolute focus on both high-quality service and efficient operations, and we believe that our corporate overhead and operating expenses are among the lowest of our peers.
Ardmore Shipping Corporation
Unaudited Condensed Consolidated Balance Sheet
(Expressed in U.S. dollars, unless otherwise stated)
As at
ASSETS Sep 30, 2019 Dec 31, 2018
Current assets
Cash and cash
equivalents 46,213,758 56,903,038
Vessel held for sale - 8,083,405
Receivables, trade 24,702,993 27,460,132
Prepayments 1,201,682 1,291,399
Advances and deposits 3,045,292 2,132,804
Other receivables 136,200 786,084
Inventories 9,027,903 12,812,039
Total current assets 84,327,828 109,468,901
Non-current assets
Vessels and vessel
equipment, net 666,588,995 721,492,473
Deferred drydock
expenditure, net 7,716,950 7,127,364
Ballast water
treatment systems,
net 2,333,451 528,774
Leasehold
improvements, net 365,708 423,620
Other non-current
assets, net 3,503,628 3,549,511
Operating lease,
right of use asset 1,839,800 2,169,158
Total non-current
assets 682,348,532 735,290,900
TOTAL ASSETS 766,676,360 844,759,801
LIABILITIES AND EQUITY
Current liabilities
Payables, trade 16,563,570 24,608,108
Other payables 72,664 35,900
Accrued interest on
debt and finance
leases 1,704,759 1,732,859
Current portion of
long-term debt 19,797,647 22,834,543
Current portion of
finance lease
obligations 17,858,905 25,849,200
Current portion of
operating lease
obligations 342,504 477,147
Total current
liabilities 56,340,049 75,537,757
Non-current liabilities
Non-current portion
of long-term debt 183,478,657 205,519,705
Non-current portion
of finance lease
obligations 202,239,877 215,626,898
Non-current portion
of operating lease
obligations 1,196,394 1,491,507
Total non-current
liabilities 386,914,928 422,638,110
Equity
Share capital 350,192 350,192
Additional paid in
capital 416,155,354 414,508,403
Treasury stock (15,348,909) (15,348,909)
Accumulated deficit (77,735,254) (52,925,752)
Total equity 323,421,383 346,583,934
TOTAL LIABILITIES AND
EQUITY 766,676,360 844,759,801
The accompanying notes are an integral part of these condensed interim consolidated financial
statements.
Ardmore Shipping Corporation
Unaudited Condensed Statement of Operations
(Expressed in U.S. dollars, unless otherwise stated)
Three months ended Nine months ended
Sep 30, 2019 Sep 30, 2018 Sep 30, 2019
Sep 30, 2018
Revenue 52,098,723 48,923,231 169,357,211 151,758,162
Commissions and voyage expenses (22,920,617) (24,360,806) (73,449,918) (68,048,930)
Vessel operating expenses (14,857,895) (16,255,279) (46,574,921) (49,667,147)
Depreciation (8,026,856) (8,910,486) (24,289,741) (26,343,052)
Amortization of deferred drydock expenditure (1,190,008) (943,926) (3,443,651) (2,595,076)
General and administrative expenses
Corporate (3,897,939) (3,432,622) (11,390,669) (10,098,644)
Commercial and chartering (843,692) (1,012,236) (2,493,372) (2,594,364)
Loss on sale of vessels - (13,162,192)
Interest expense and finance costs (6,344,892) (6,317,760) (20,107,786) (18,659,848)
Interest income 235,212 144,760 792,211 411,749
Loss before taxes (5,747,964) (12,165,124) (24,762,828) (25,837,150)
Income tax 35,246 (60,197) (46,674) (137,923)
Net loss (5,712,718) (12,225,321) (24,809,502) (25,975,073)
Net loss per share, basic and diluted (0.17) (0.37) (0.75) (0.79)
RESULTS FROM CONTINUING OPERATIONS (1)
Net loss from continuing operations (5,712,718) (12,225,321) (11,647,310) (25,560,176)
Net loss per share from continuing operations (0.17) (0.37) (0.35) (0.78)
Weighted average number of shares outstanding, 33,097,831 33,097,831 33,097,831 32,750,259
basic and diluted
(1) Net loss from continuing
operations is a non-GAAP
measure and is defined and
reconciled under the "Non-
GAAP Measures" section.
Ardmore Shipping Corporation
Unaudited Condensed Statement of Cash Flows
(Expressed in U.S. dollars, unless otherwise stated)
Nine months ended
Sep 30, 2019 Sep 30, 2018
OPERATING ACTIVITIES
Net loss (24,809,502) (25,975,073)
Adjustment to reconcile net loss to net cash flow provided by operating activities:
Depreciation 24,289,741 26,343,052
Amortization of deferred drydock expenditure 3,443,651 2,595,076
Share-based compensation 1,646,951 1,301,476
Loss on sale of vessels 13,162,192 -
Amortization of deferred finance fees 1,526,417 2,229,288
Foreign exchange on operating leases (100,398) (165,908)
Changes in operating assets and liabilities:
Receivables, trade 2,757,139 (618,396)
Working capital advances - 3,100,000
Prepayments 89,717 (27,388)
Advances and deposits (912,491) 1,044,789
Other receivables 649,884 (943,258)
Inventories 3,784,136 (5,141,686)
Payables, trade (7,710,940) 8,732,141
Accruals for capital items (255,741) (1,137,521)
Other payables 39,754 59,635
Accrued interest on debt and finance leases (28,100) 255,317
Deferred drydock expenditure (4,295,870) (4,178,630)
Net cash provided by operating activities 13,276,540 7,472,914
INVESTING ACTIVITIES
Net proceeds from sale of vessels 26,557,707 -
Payments for acquisition of vessels and equipment (491,735) (16,562,821)
Payments for acquisition of ballast water treatment systems (1,772,722) -
Payments for leasehold improvements (13,030) (52,384)
Payments for other non-current assets (146,826) (133,629)
Net cash provided by / (used in) investing activities 24,133,394 (16,748,834)
FINANCING ACTIVITIES
Proceeds from long-term debt - 3,587,161
Repayments of long-term debt (26,183,384) (58,704,318)
Proceeds from finance leases - 56,600,000
Repayments of finance leases (21,915,830) (4,583,547)
Payments for deferred finance fees - (1,051,000)
Net proceeds from equity offering - 7,241,383
---
Net cash (used in) / provided by financing activities (48,099,214) 3,089,679
Net decrease in cash and cash equivalents (10,689,280) (6,186,241)
Cash and cash equivalents at the beginning of the year 56,903,038 39,457,407
Cash and cash equivalents at the end of the period 46,213,758 33,271,166
Ardmore Shipping Corporation
Unaudited Other Operating Data
(Expressed in U.S. dollars, unless otherwise stated)
Three months ended Nine months ended
Sep 30, 2019 Sep 30, 2018 Sep 30, 2019 Sep 30, 2018
ADJUSTED EBITDA (1) 9,578,580 3,862,288 35,448,331 21,349,077
AVERAGE DAILY DATA
MR Tankers Spot & Pool TCE per day (2) 13,784 10,314 14,601 11,450
Fleet TCE per day (2) 13,029 10,261 14,045 11,816
Fleet operating expenses per day (3) 5,772 5,779 6,069 6,007
Technical management fees per day (4) 422 397 446 419
6,194 6,176 6,515 6,426
MR Tankers Eco-Design
TCE per day (2) 13,993 10,684 14,964 11,506
Vessel operating expenses per day (5) 6,262 6,279 6,481 6,516
MR Tankers Eco-Mod
TCE per day (2) 12,438 9,645 13,441 11,333
Vessel operating expenses per day (5) 5,982 5,903 6,577 6,377
Prod/Chem Tankers Eco-Design (25k - 38k Dwt)
TCE per day (2) 11,013 10,093 11,784 12,400
Vessel operating expenses per day (5) 6,264 6,249 6,379 6,268
FLEET
Upgrades and enhancements expensed 539,431 323,296 701,690 720,786
Average number of owned operating vessels 25.0 28.0 25.7 28.0
(1) Adjusted EBITDA is a non-GAAP
measure and is defined and
reconciled to the most directly
comparable U.S. GAAP measure under
the "Non-GAAP Measures" section.
(2) Time Charter Equivalent ("TCE") rate,
a non-GAAP measure, represents net
revenues divided by revenue days.
Revenue days are the total number of
calendar days the vessels are in our
possession less off-hire days
generally associated with drydocking
or repairs, idle days or
repositioning associated with
vessels held for sale. For vessels
employed on voyage charters, TCE is
the net rate after deducting voyage
expenses incurred, divided by
revenue days, including, among other
expenses, all commissions and pool
administration fees. TCE is reported
on a discharge to discharge basis.
(3) Fleet operating expenses per day are
routine operating expenses and
comprise crewing, repairs and
maintenance, insurance, stores, lube
oils and communication expenses.
They do not include additional
expenses related to the upgrading or
enhancement of the vessels that are
not capitalized.
(4) Technical management fees are fees
paid to third-party technical
managers.
(5) Vessel operating expenses per day
include technical management fees.
Ardmore Shipping Corporation
Fleet Details at September 30, 2019
(Expressed in U.S. dollars, unless otherwise stated)
Vessel IMO Built Country DWT
Cargo
Engine Type
Cargo Inerting
Eco
Resale Depreciated
Newbuilding
Capacity (m(3)) Segregations System
Specification
Price (1) Replacement
Sep 30, 2019
Value (2)
Seavaliant
IMO2/3
Feb-13
S. Korea 49,998 53,361
6S50 ME-C8.2 6
IG Plant
Eco-Design $39.00 $29.57
Seaventure
IMO2/3
Jun-13
S. Korea 49,998 53,375
6S50 ME-C8.2 6
IG Plant
Eco-Design $39.00 $29.96
Seavantage
IMO2/3
Jan-14
S. Korea 49,997 53,288
6S50 ME-B9.2 6
IG Plant
Eco-Design $39.00 $30.84
Seavanguard
IMO2/3
Feb-14
S. Korea 49,998 53,287
6S50 ME-B9.2 6
IG Plant
Eco-Design $39.00 $30.95
Sealion
IMO2/3
May-15
S. Korea 49,999 52,928
6S50 ME-B9.2 6
IG Plant
Eco-Design $39.00 $32.78
Seafox
IMO2/3
Jun-15
S. Korea 49,999 52,930
6S50 ME-B9.2 6
IG Plant
Eco-Design $39.00 $32.89
Seawolf
IMO2/3
Aug-15
S. Korea 49,999 52,931
6S50 ME-B9.2 6
IG Plant
Eco-Design $39.00 $33.09
Seahawk
IMO2/3
Nov-15
S. Korea 49,999 52,931
6S50 ME-B9.2 6
IG Plant
Eco-Design $39.00 $33.40
Endeavour
IMO2/3
Jul-13
S. Korea 49,997 53,637
6S50 ME-C8.2 6
IG Plant
Eco-Design $39.00 $30.13
Enterprise
IMO2/3
Sep-13
S. Korea 49,453 52,774
6S50 ME-B9.2 6
IG Plant
Eco-Design $39.00 $30.35
Endurance
IMO2/3
Dec-13
S. Korea 49,466 52,770
6S50 ME-B9.2 6
IG Plant
Eco-Design $39.00 $30.69
Encounter
IMO2/3
Jan-14
S. Korea 49,494 52,776
6S50 ME-B9.2 6
IG Plant
Eco-Design $39.00 $30.77
Explorer
IMO2/3
Jan-14
S. Korea 49,478 52,775
6S50 ME-B9.2 6
IG Plant
Eco-Design $39.00 $30.86
Exporter
IMO2/3
Feb-14
S. Korea 49,466 52,770
6S50 ME-B9.2 6
IG Plant
Eco-Design $39.00 $30.97
Engineer
IMO2/3
Mar-14
S. Korea 49,420 52,789
6S50 ME-B9.2 6
IG Plant
Eco-Design $39.00 $31.07
Seamariner
IMO3
Oct-06
Japan 45,726 52,280
6S50MC-6.1 3
Flue Gas
Eco-Mod $39.00 $20.22
Sealeader
IMO3
Jun-08
Japan 47,451 52,527
6S50MC-6.1 3
Flue Gas
Eco-Mod $39.00 $22.55
Sealifter
IMO3
Aug-08
Japan 47,463 52,534
6S50MC-6.1 3
Flue Gas
Eco-Mod $39.00 $22.84
Sealancer
IMO3
Jul-08
Japan 47,472 52,467
6S50MC-6.1 3
Flue Gas
Eco-Mod $39.00 $22.67
Dauntless
IMO2
Feb-15
S. Korea 37,764 41,620
6S50 ME-B9.2 14
Nitrogen
Eco-Design $37.00 $30.65
Defender
IMO2
Feb-15
S. Korea 37,791 41,620
6S50 ME-B9.2 14
Nitrogen
Eco-Design $37.00 $30.69
Cherokee
IMO2
Jan-15
Japan 25,215 28,475
6S46 ME-B8.3 12
Nitrogen
Eco-Design $33.00 $27.12
Cheyenne
IMO2
Mar-15
Japan 25,217 28,490
6S46 ME-B8.3 12
Nitrogen
Eco-Design $33.00 $27.39
Chinook
IMO2
Jul-15
Japan 25,217 28,483
6S46 ME-B8.3 12
Nitrogen
Eco-Design $33.00 $27.77
Chippewa
IMO2
Nov-15
Japan 25,217 28,493
6S46 ME-B8.3 12
Nitrogen
Eco-Design $33.00 $28.13
$728.32
Cash /Debt /Working Capital /Other
Assets ($360.13)
Total Asset Value (Assets) (5) $368.19
DRV / Share (3)(5) $11.12
Ardmore Commercial Management (4) $18.97
Total Asset Value (Assets & Commercial
Mgt.) (5) $387.16
DRV / Share (3)(5) $11.70
1. Based on broker estimates of prompt
resale for a newbuild vessel of
equivalent deadweight tonne at a
yard in South Korea as at September
30, 2019.
2. Depreciated Replacement Value
("DRV") is based on estimated
resale price for a newbuild vessel
depreciated for the age of each
vessel (assuming an estimated
useful life of 25 years on a
straight-line basis and assuming a
residual scrap value of $300 per
tonne which is in line with
Ardmore's depreciation policy). The
Company's estimates of DRV assume
that its vessels are all in good
and seaworthy condition without the
need for repair and, if inspected,
that they would be certified in
class without notations of any
kind. Vessel values are highly
volatile and, as such, the
Company's estimates of DRV may not
be indicative of the current or
future value of its vessels, or
prices that the Company could
achieve if it were to sell them.
3. DRV /Share calculated using
33,097,831 shares outstanding as at
September 30, 2019.
4. Ardmore Commercial Management is
management's estimate of the value
of Ardmore's commercial management
and pooling business. The estimate
is based on industry standard
commercial management and pooling
fees in determining revenue less
Ardmore's commercial and chartering
overhead (as stated in Ardmore's
Statement of Operations) and
applying an illustrative multiple
to the resulting net earnings of
7x. The multiple is illustrative
only and may not be indicative of
the valuation multiple the Company
could achieve if it were to sell
its commercial management and
pooling business. Revenue of this
business is comprised of (i)
commission (1.25% for standard
product tankers and 2.5% for
chemical tankers) on gross freight
based on estimated current TCE
rates grossed up for fuel and
voyage costs and (ii)
administration fee of $300 per
vessel per day. These rates may
vary over time.
5. Depreciated Asset Value ("DRV") and
DRV per share are non-GAAP
measures. Management believes that
many investors use DRV as a
reference point in assessing
valuation of fleets of ships and
similar assets.
CO(2) Emissions Reporting
In April 2018, the International Maritime Organization's ("IMO") Marine Environment Protection Committee ("MEPC") adopted an initial strategy for the reduction of greenhouse gas ("GHG") emissions from ships, setting out a vision to reduce GHG emissions from international shipping and phase them out as soon as possible.
Ardmore is committed to transparency and contributing to the reduction of CO(2) emissions in the Company's industry. Effective July 1, 2019, the Company has commenced reporting of carbon emissions data for its fleet. Ardmore's reporting methodology is in line with the framework set out within the IMO's Data Collection System ("DCS") initiated in January 2019.
Three months ended
Nine months ended
Mar 31, 2019
Jun 30, 2019
Sep 30, 2019
Sep 30, 2019
Number of vessels in operation at the end of the reporting period 26 25 25 25
Fleet average age at end of reporting period in years 6.0 5.9 6.2 6.2
CO2 emissions generated from vessels in metric tonnes 96,819 112,346 115,169 324,334
Fleet Annual Efficiency Ratio (AER)([1]) for the period
6.59g / tonne-mile
6.08g / tonne-mile
5.48g / tonne-mile
6.05g / tonne-mile
Fleet Energy Efficiency Operational Indicator (EEOI)([2]) for the period
13.79g / tonne-mile
12.10g / tonne-mile
12.57g / tonne-mile
12.82g / tonne-mile
It is expected that the shipping industry will continue to refine the performance measures for emissions and efficiency over time. AER and EEOI metrics are impacted by external factors such as charter speed, vessel orders and weather, in conjunction with overall market factors such as cargo load sizes and fleet utilization rate. As such, variance in performance can be found in the reported emissions between two periods for the same vessel and between vessels of a similar size and type. Furthermore, other companies may report slight variations in methodology((3)()) and consequently it is not always practical to directly compare emissions from different companies.
The figures reported above represent Ardmore's initial findings; the Company is committed to improving the methodology and transparency of its emissions reporting in line with industry best practices. Accordingly, the above results may vary as the methodology and performance measures set out by the industry evolve.
__________________________
(1)
Annual Efficiency Ratio ("AER") is a
measure of carbon efficiency using the parameters of
fuel consumption, distance travelled, and design
deadweight tonnage ("DWT"). AER is reported in unit
grams of CO2 per ton-mile (gCO2/dwt-nm). It is
calculated by dividing (i) mass of fuel consumed by
type converted to metric tonnes of CO2 by (ii) DWT
multiplied by distance travelled in nautical miles
(2)
Energy Efficiency Operational Indicator
("EEOI") is a tool for measuring the CO2 gas
emissions in a given time period per unit transport
work performed. It is calculated by dividing (i) mass
of fuel consumed by type converted to metric tonnes
of CO2 by (ii) cargo carried in tonnes multiplied by
laden voyage distance in nautical miles. This
calculation is performed as per IMO MEPC.1/Circ684.
Ardmore's EEOI data is measured based on the
reporting tools and information reasonably available
to the applicable third-party technical managers.
Management assesses such data from the third-party
technical managers and may adjust and restate the
data to reflect an appropriate fleet-wide assessment
methodology
(3)
Some shipping companies report CO2 in
tonne per kilometre as opposed to CO2 in tonnes per
nautical mile
Non-GAAP Measures
This press release describes EBITDA, adjusted EBITDA and net loss from continuing operations, which are not measures prepared in accordance with U.S. GAAP and are defined and reconciled below. EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA before certain items that Ardmore believes are not representative of its operating performance, including gain or loss on sale of vessels. Net loss from continuing operations excludes certain items from GAAP net loss because they are considered to be unusual items, including gain or loss on sale of vessels.
These non-GAAP measures are presented in this press release as the Company believes that they provide investors with a means of evaluating and understanding how Ardmore's management evaluates operating performance. EBITDA and adjusted EBITDA increase the comparability of the Company's fundamental performance from period to period. This increased comparability is achieved by excluding the potentially disparate effects between periods of interest expense, taxes, depreciation or amortization, which items are affected by various and possibly changing financing methods, capital structure and historical cost basis and which items may significantly affect net income between periods. The Company believes that including EBITDA, adjusted EBITDA and net loss from continuing operations as financial and operating measures assists investors in making investment decisions regarding the Company and its common stock.
These non-GAAP measures should not be considered in isolation from, as a substitute for, or superior to, financial measures prepared in accordance with U.S. GAAP. In addition, these non-GAAP measures may not have a standardized meaning and therefore may not be comparable to similar measures presented by other companies. All amounts in the tables below are expressed in U.S. dollars, unless otherwise stated.
Reconciliation of net loss to EBITDA and adjusted EBITDA
Three months ended Nine months ended
Sep 30, 2019 Sep 30, 2018 Sep 30, 2019 Sep 30, 2018
Net loss (5,712,718) (12,225,321) (24,809,502) (25,975,073)
Interest income (235,212) (144,760) (792,211) (411,749)
Interest expense and finance costs 6,344,892 6,317,760 20,107,786 18,659,848
Income tax (35,246) 60,197 46,674 137,923
Depreciation 8,026,856 8,910,486 24,289,741 26,343,052
Amortization of deferred drydock expenditure 1,190,008 943,926 3,443,651 2,595,076
EBITDA 9,578,580 3,862,288 22,286,139 21,349,077
Loss on sale of vessels - 13,162,192
ADJUSTED EBITDA 9,578,580 3,862,288 35,448,331 21,349,077
Reconciliation of net loss to net loss from continuing operations
Three months ended Nine months ended
Sep 30, 2019 Sep 30, 2018 Sep 30, 2019 Sep 30, 2018
Net loss (5,712,718) (12,225,321) (24,809,502) (25,975,073)
Loss on sale of vessels - 13,162,192
Deferred finance fees write-off - 414,897
Net loss from continuing operations([4]) (5,712,718) (12,225,321) (11,647,310) (25,560,176)
Net loss from continuing operations per share (0.17) (0.37) (0.35) (0.78)
Weighted average number of shares 33,097,831 33,097,831 33,097,831 32,750,259
__________________________
1 Net loss from continuing operations is defined in
Ardmore dividend policy and above.
Forward Looking Statements
Matters discussed in this press release may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. In some cases, you can identify the forward-looking statements by the use of words such as "believe", "anticipate", "intends", "estimate", "forecast", "plan", "potential", "may", "expect", and similar expressions.
Forward looking statements in this press release include, among others, the following statements: future operating or financial results; global and regional economic conditions and trends; shipping market trends and market fundamentals, including expected tanker demand and scrapping levels and the sustainability of current market improvement; the effect on tanker demand of the IMO 2020 regulations, the winter season and sanctions, and the timing and duration of such effects; expected tanker market fleet growth; the Company's ability to benefit from tanker rate increases; expected global oil consumption and refinery capacity growth; the effects and expected duration of regulatory uncertainty on the global maritime industry regarding greenhouse gas emissions; the time it will take for new technologies addressing greenhouse gas emissions to emerge; the pending debt refinancing; expected employment of the Company's vessels during the fourth quarter of 2019; expected drydocking days in the fourth quarter of 2019; management's estimate of the value of the Company's commercial management and pooling business; the benefits of the Company's commitment to transparency regarding emissions; and expected continuation of refinement by the shipping industry of performance measures for emissions and efficiency. The forward-looking statements in this press release are based upon various assumptions, including, without limitation, Ardmore management's examination of historical operating trends, data contained in the Company's records and other data available from third parties. Although the Company believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond the Company's control, the Company cannot assure you that it will achieve or accomplish these expectations, beliefs or projections. The Company cautions readers of this release not to place undue reliance on these forward-looking statements, which speak only as of their dates. The Company undertakes no obligation to update or revise any forward-looking statements. These forward-looking statements are not guarantees of the Company's future performance, and actual results and future developments may vary materially from those projected in the forward-looking statements.
In addition to these important factors, other important factors that, in the Company's view, could cause actual results to differ materially from those discussed in the forward-looking statements include: current expected spot rates compared with current and expected charter rates, the failure of counterparties to fully perform their contracts with the Company; the strength of world economies and currencies; general market conditions, including fluctuations in charter rates and vessel values; changes in demand for and the supply of tanker vessel capacity; changes in the projections of spot and time charter or pool trading of the Company's vessels; changes in the Company's operating expenses, including bunker prices, drydocking and insurance costs; the market for the Company's vessels; competition in the tanker industry; availability of financing and refinancing; charter counterparty performance; ability to obtain financing and comply with covenants in such financing arrangements; changes in governmental rules and regulations or actions taken by regulatory authorities; general domestic and international political conditions; potential disruption of shipping routes due to accidents, piracy or political events; the Company may not be able to charter vessels for all remaining revenue days during the fourth quarter of 2019 in the spot market or may choose to charter vessels on other employment; vessels breakdowns and instances of off-hire; and other factors. Please see the Company's filings with the U.S. Securities and Exchange Commission for a more complete discussion of these and other risks and uncertainties.
Investor Relations Enquiries:
Mr. Leon Berman
Mr. Bryan Degnan
The IGB Group
The IGB Group
45 Broadway, Suite 1150
45 Broadway, Suite 1150
New York, NY 10006
New York, NY 10006
Tel: 212-477-8438
Tel: 646-673-9701
Fax: 212-477-8636
Fax: 212-477-8636
Email: lberman@igbir.com
Email: bdegnan@igbir.com
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SOURCE Ardmore Shipping Corporation
