Ardmore Shipping Corporation Announces Financial Results For The Three Months Ended March 31, 2020
HAMILTON, Bermuda, May 5, 2020 /PRNewswire/ -- Ardmore Shipping Corporation (NYSE: ASC) ("Ardmore", the "Company" or "we") today announced results for the three months ended March 31, 2020.
Highlights and Recent Activity
-- Reported net income of $6.5 million for the three months ended March 31,
2020, or $0.20 earnings per basic and diluted share, as compared to a
net loss of $9.2 million, or $0.28 loss per basic and diluted share, for
the three months ended March 31, 2019. Net loss for the three months
ended March 31, 2019 includes the loss on sale of the Ardmore Seamaster
of $6.6 million. The Company reported EBITDA (see Non-GAAP Measures
section) of $21.0 million for the three months ended March 31, 2020, as
compared to $7.0 million for the three months ended March 31, 2019.
-- Reported Adjusted earnings (see Non-GAAP Measures section) of $6.5
million for the three months ended March 31, 2020, or $0.20 Adjusted
earnings per basic and diluted share, as compared to Adjusted loss of
$2.6 million, or $0.08 Adjusted loss per basic and diluted share, for
the three months ended March 31, 2019. The Company reported Adjusted
EBITDA (see Non-GAAP Measures section) of $21.0 million for the three
months ended March 31, 2020, as compared to $13.5 million for the three
months ended March 31, 2019.
-- MR tankers earned an average TCE rate of $19,307 per day and chemical
tankers earned an average TCE rate of $19,707 per day for the three
months ended March 31, 2020.
-- Announced a new capital allocation policy on March 9, 2020, which sets
out the Company's priorities among fleet maintenance, financial
strength, accretive growth and returning capital to shareholders.
Consistent with this policy, the Company is not declaring a dividend for
the first quarter of 2020.
-- On March 11, 2020, the World Health Organization declared the outbreak
of a coronavirus (COVID-19) a pandemic. As COVID-19 continues to spread
globally, the Company's business, financial condition and results of
operations could be adversely affected. The extent of the impact of the
COVID-19 pandemic on the Company will depend, among other things, the
duration and spread of the outbreak, all of which are highly uncertain
and cannot be predicted.
Anthony Gurnee, the Company's Chief Executive Officer, commented:
"That the tanker market is achieving record-high charter rates is no source of satisfaction given the cause: the coronavirus pandemic, with its human toll and economic impact. Our principal concern is for the well-being of our staff ashore and afloat; in particular we want to thank all seafarers regardless of company or sector for their dedication and professionalism during these difficult times.
Much attention has been on the crude tanker market, in particular on the impact of higher cargo volumes, floating storage, and the resulting extraordinarily high rates achieved. More recently those conditions have arrived for the product tanker market and we believe they may be more persistent, potentially for many months, as the physical oil market continues its extreme gyrations around demand and supply.
In particular, if and when the oil market reaches max capacity for shore oil storage, we may enter a new and potentially more volatile phase of the tanker market, and if and when oil demand rebounds with an economic recovery sometime in the third quarter as the IEA are forecasting, we would expect more demand-driven volatility, potentially carrying into the winter.
To fully explain the impact of these events, we have to describe our recent chartering activity: last week we fixed a 55-day voyage at $72,000 per day, equivalent to a VLCC at $200,000+ per day. Our MR voyages in progress, representing roughly the last three weeks' fixtures, now stands at $28,200 per day; lower than brokerage reports or the above fixture, but higher than anything we achieved before. If rates for our fleet averaged $28,200 per day for a full year, taking 1Q20 as a base, we estimate that our annual earnings would be $110 million or $3.30 per share; we are not forecasting any future results, but rather just contextualizing what is happening.
The fact the tanker market is soaring at a time when virtually every other industry is suffering is not illogical: shipping rates typically strengthen with volatility and disruption. We are saddened by the widespread suffering from the pandemic, but it should be understood that as an industry we respond to demand shifts through a market mechanism whose function is to optimally allocate transport (and storage) resources, often in surplus, sometimes in scarcity."
Summary of Recent and First Quarter 2020 Events
Fleet
Fleet Operations and Employment
As at March 31, 2020, 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 first quarter of 2020, the Company had 19 Eco MR tankers trading in the spot market. The Eco MR tankers earned an average TCE rate of $19,307 per day in the first quarter of 2020. The Company's 15 Eco-Design MR tankers earned an average TCE rate of $19,564 per day in the first quarter of 2020, and the Company's four Eco-Mod MR tankers earned an average TCE rate of $18,341 per day.
In the second quarter of 2020, the Company expects to have all revenue days for its MR Eco-Design and MR Eco-Mod tankers employed in the spot market or on short-term time charter. As of May 5, 2020, the Company had fixed approximately 55% of its total MR revenue days for the second quarter of 2020 at an average TCE rate of approximately $24,000 per day.
Product / Chemical Tankers (IMO 2: 25,000 Dwt - 37,800 Dwt)
At the end of the first quarter of 2020, the Company had six Eco-Design IMO 2 product / chemical tankers in operation, all of which were trading in the spot market. During the first quarter of 2020, the Company's six Eco-Design product / chemical vessels earned an average TCE rate of $19,707 per day.
In the second quarter of 2020, the Company expects to have all revenue days for its Eco-Design IMO 2 product / chemical tankers employed in the spot market. As of May 5, 2020, the Company had fixed approximately 45% of its Eco-Design IMO 2 product / chemical tankers spot revenue days for the second quarter of 2020 at an average TCE rate of approximately $16,000 per day.
Drydocking
The Company had 91 drydock days, including repositioning days, in the first quarter of 2020, in respect of three drydockings. The Company does not expect to have any drydock days in the second quarter of 2020.
Capital Allocation Policy
The Company announced a new capital allocation policy on March 9, 2020, which sets out the Company's priorities among fleet maintenance, financial strength, accretive growth and returning capital to shareholders. Consistent with this policy, the Company is not declaring a dividend for the first quarter of 2020.
Financing
The Company drew down an additional $10.9 million from its revolving credit facilities in the first quarter, in order to maintain a strong liquidity position and financial flexibility.
Results for the Three Months Ended March 31, 2020 and 2019
The Company reported net income of $6.5 million for the three months ended March 31, 2020, or $0.20 earnings per basic and diluted share, as compared to a net loss of $9.2 million, or $0.28 loss per basic and diluted share, for the three months ended March 31, 2019. Net loss for the three months ended March 31, 2019 includes the loss on sale of the Ardmore Seamaster of $6.6 million. The Company reported EBITDA (see Non-GAAP Measures section) of $21.0 million for the three months ended March 31, 2020, as compared to $7.0 million for the three months ended March 31, 2019.
The Company reported Adjusted earnings (see Non-GAAP Measures section) of $6.5 million for the three months ended March 31, 2020, or $0.20 Adjusted earnings per basic and diluted share, as compared to an Adjusted loss of $2.6 million, or $0.08 Adjusted loss per basic and diluted share, for the three months ended March 31, 2019. The Company reported Adjusted EBITDA (see Non-GAAP Measures section) of $21.0 million for the three months ended March 31, 2020, as compared to $13.5 million for the three months ended March 31, 2019.
Management's Discussion and Analysis of Financial Results for the Three Months Ended March 31, 2020 and 2019
Revenue. Revenue for the three months ended March 31, 2020 was $65.2 million, an increase of $2.9 million from $62.3 million for the three months ended March 31, 2019.
The Company's average number of owned vessels decreased to 25.0 for the three months ended March 31, 2020, from 26.7 for the three months ended March 31, 2019, resulting in revenue days of 2,180 for the three months ended March 31, 2020, as compared to 2,260 for the three months ended March 31, 2019. The Company had 25 and 26 vessels employed directly in the spot market as at March 31, 2020 and 2019, respectively. The decrease in revenue days resulted in a decrease in revenue of $2.2 million, while changes in spot rates resulted in an increase in revenue of $5.1 million for the three months ended March 31, 2020.
Voyage Expenses. Voyage expenses were $23.7 million for the three months ended March 31, 2020, a decrease of $3.6 million from $27.3 million for the three months ended March 31, 2019. Voyage expenses decreased primarily due to the decrease in the average number of owned vessels to 25.0 for the three months ended March 31, 2020, compared to 26.7 for the three months ended March 31, 2019.
TCE Rate. The average TCE rate for the Company's fleet was $19,390 per day for the three months ended March 31, 2020, an increase of $4,385 per day from $15,005 per day for the three months ended March 31, 2019. The increase in average TCE rate was the result of higher spot rates and lower voyage expenses for the three months ended March 31, 2020. TCE rates represent net revenues (or revenue less voyage expenses) divided by revenue days.
Vessel Operating Expenses. Vessel operating expenses were $15.7 million for the three months ended March 31, 2020, a decrease of $1.1 million from $16.8 million for the three months ended March 31, 2019. This decrease is due to a decrease in the average number of vessels in operation for the three months ended March 31, 2020, 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 $6,484 per vessel for the three months ended March 31, 2020, as compared to $6,941 per vessel for the three months ended March 31, 2019.
Depreciation. Depreciation expense for the three months ended March 31, 2020 was $7.9 million, a decrease of $0.3 million from $8.2 million for the three months ended March 31, 2019. This decrease is primarily due to a decrease in the average number of owned vessels for the three months ended March 31, 2020.
Amortization of Deferred Drydock Expenditures. Amortization of deferred drydock expenditures for the three months ended March 31, 2020 was $1.3 million, an increase of $0.2 million from $1.1 million for the three months ended March 31, 2019. The increase is primarily due to an increased number of drydockings as the Company's fleet ages. The deferred 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 March 31, 2020 were $4.0 million, an increase of $0.4 million from $3.6 million for the three months ended March 31, 2019. The increase is primarily due to the issuance of stock appreciation rights and restricted stock units in the first quarter of 2020.
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 March 31, 2020 were $0.9 million, a decrease of $0.2 million from $1.1 million for the three months ended March 31, 2019. This decrease is as a result of lower headcount and less travel in the first quarter of 2020.
Loss on Sale of Vessel. There was no loss on sale of vessel for the three months ended March 31, 2020, compared to $6.6 million for the three months ended March 31, 2019 in relation to the sale of the Ardmore Seamaster.
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 March 31, 2020 were $5.4 million, a decrease of $1.6 million from $7.0 million for the three months ended March 31, 2019. Cash interest expense decreased by $1.5 million to $5.0 million for the three months ended March 31, 2020, from $6.5 million for the three months ended March 31, 2019, primarily due to a decreased average LIBOR during the three months ended March 31, 2020, compared to the three months ended March 31, 2019. Amortization of deferred finance fees for the three months ended March 31, 2020 was $0.4 million, a decrease of $0.1 million from $0.5 million for the three months ended March 31, 2019.
Liquidity
As at March 31, 2020, the Company had $64.5 million (December 31, 2019: $51.7 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
March 31, 2020
December 31, 2019
Finance leases $211,240,676 $215,679,694
Senior Debt $160,297,869 $163,264,006
Revolving Credit Facilities $54,967,734 $44,019,007
Operating leases $1,592,226 $1,471,753
Total $428,098,505 $424,434,460
Conference Call
The Company plans to have a conference call on May 5, 2020 at 11:00 a.m. Eastern Time to discuss its results for the quarter ended March 31, 2020. 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 May 12, 2020 at 877-344-7529 or 412-317-0088. Enter the passcode 10143555 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 Interim Condensed Consolidated Balance Sheets
(Expressed in U.S. Dollars)
As at
ASSETS
March 31, 2020
December 31, 2019
Current assets
Cash and cash equivalents 64,468,662 51,723,107
Receivables, net of allowance for bad debts of $0.8 million 27,705,982 30,083,358
(2019: $0.9 million)
Prepaid expenses and other assets 2,068,890 1,940,030
Advances and deposits 4,083,461 4,114,065
Inventories 10,696,789 10,158,735
Total current assets 109,023,784 98,019,295
Non-current assets
Vessels and vessel equipment, net 653,611,582 660,823,330
Deferred drydock expenditures, net 10,172,068 7,668,711
Ballast water treatment systems, installation in progress 320,607 384,408
Other non-current assets, net 841,054 917,222
Amount receivable in respect of finance leases 2,880,000 2,880,000
Operating lease, right of use asset 1,921,419 1,745,464
Total non-current assets 669,746,730 674,419,135
TOTAL ASSETS 778,770,514 772,438,430
LIABILITIES AND EQUITY
Current liabilities
Accounts payable 6,679,219 4,789,935
Accrued expenses 11,547,706 16,278,084
Accrued interest on debt and finance leases 775,949 880,183
Current portion of long-term debt 32,638,262 20,216,171
Current portion of finance lease obligations 18,069,882 17,975,322
Current portion of operating lease obligations 402,619 289,231
Total current liabilities 70,113,637 60,428,926
Non-current liabilities
Non-current portion of long-term debt 182,627,341 187,066,842
Non-current portion of finance lease obligations 193,170,794 197,704,372
Non-current portion of operating lease obligations 1,189,607 1,182,522
Total non-current liabilities 376,987,742 385,953,736
Stockholders' equity
Common stock 351,469 350,192
Additional paid in capital 415,934,903 416,841,494
Treasury stock (15,348,909) (15,348,909)
Accumulated deficit (69,268,328) (75,787,009)
Total stockholders' equity 331,669,135 326,055,768
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 778,770,514 772,438,430
Ardmore Shipping Corporation
Unaudited Interim Condensed Consolidated Statements of Comprehensive Income / (Loss)
(Expressed in U.S. Dollars, except for shares)
Three months ended
March 31, 2020
March 31, 2019
Revenue, net 65,193,515 62,266,387
Voyage expenses (23,662,392) (27,250,124)
Vessel operating expenses (15,686,154) (16,838,288)
Depreciation (7,854,959) (8,230,492)
Amortization of deferred drydock expenditures (1,285,342) (1,138,763)
General and administrative expenses
Corporate (3,985,678) (3,583,173)
Commercial and chartering (867,387) (1,056,621)
Loss on sale of vessel - (6,569,763)
Interest expense and finance costs (5,446,621) (6,957,660)
Interest income 144,202 238,338
Income / (loss) before taxes 6,549,184 (9,120,159)
Income tax (30,503) (33,620)
Net income / (loss) and comprehensive income / (loss) 6,518,681 (9,153,779)
Earnings / (loss) per share, basic 0.20 (0.28)
Earnings / (loss) per share, diluted 0.20 (0.28)
ADJUSTED EARNINGS / (LOSS) (1)
Adjusted earnings / (loss) 6,518,681 (2,584,016)
Adjusted earnings / (loss) per share, basic 0.20 (0.08)
Adjusted earnings / (loss) per share, diluted 0.20 (0.08)
Weighted average number of shares outstanding, basic 33,196,917 33,097,831
Weighted average number of shares outstanding, diluted 33,317,114 33,097,831
(1) Adjusted earnings /(loss) is a
non-GAAP measure and is defined
and reconciled under the "Non-
GAAP Measures" section. Adjusted
earnings /(loss) has been
calculated as Earnings per share
reported under US GAAP as
adjusted for unrealized and
realized gains and losses and
extraordinary items.
Ardmore Shipping Corporation
Unaudited Interim Condensed Consolidated Statements of Cash Flows
(Expressed in U.S. Dollars)
Three months ended
March 31, 2020
March 31, 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income / (loss) 6,518,681 (9,153,779)
Adjustments to reconcile net income / (loss) to net cash provided by
operating activities:
Depreciation 7,854,959 8,230,492
Amortization of deferred drydock expenditures 1,285,342 1,138,763
Share-based compensation 753,994 442,051
Loss on sale of vessel - 6,569,763
Amortization of deferred finance fees 435,046 514,887
Foreign exchange (55,485) (36,799)
Deferred drydock expenditures (2,171,613) (1,918,672)
Changes in operating assets and liabilities:
Receivables 2,377,376 (190,350)
Prepaid expenses and other assets (128,860) (166,937)
Advances and deposits 30,604 (724,475)
Inventories (538,054) 1,547,871
Accounts payable 561,129 (2,742,536)
Accrued expenses and other liabilities (4,907,658) (1,961,724)
Accrued interest on debt and finance leases (104,234) 16,496
Net cash provided by operating activities 11,911,227 1,565,051
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of vessels - 17,558,372
Payments for vessel equipment and Ballast water treatment systems, (605,523) (888,890)
installation in progress
Payments for other non-current assets (9,368) (61,092)
Net cash (used in) / provided by investing activities (614,891) 16,608,390
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt 10,948,727 3,048
Repayments of long-term debt (3,229,177) (10,003,609)
Repayments of finance leases (4,611,023) (12,787,540)
Payment of dividend (1,659,308) -
Net cash provided by / (used in) financing activities 1,449,219 (22,788,101)
Net increase / (decrease) in cash and cash equivalents 12,745,555 (4,614,660)
Cash and cash equivalents at the beginning of the year 51,723,107 56,903,038
Cash and cash equivalents at the end of the period 64,468,662 52,288,378
Ardmore Shipping Corporation
Unaudited Other Operating Data
(Expressed in U.S. Dollars, unless otherwise stated)
Three months ended
March 31, 2020
March 31, 2019
ADJUSTED EBITDA (1) 20,991,904 13,538,181
AVERAGE DAILY DATA PER VESSEL
MR Tankers Spot (2) 19,307 15,856
Fleet TCE per day (2) 19,390 15,005
Fleet operating expenses per day (3) 6,026 6,482
Technical management fees per day (4) 458 459
6,484 6,941
MR Tankers Eco-Design
TCE per day (2) 19,564 16,252
Vessel operating expenses per day (5) 6,361 6,883
MR Tankers Eco-Mod
TCE per day (2) 18,341 14,860
Vessel operating expenses per day (5) 6,559 6,886
Prod / Chem Tankers Eco-Design (25k - 38k Dwt)
TCE per day (2) 19,707 12,142
Vessel operating expenses per day (5) 6,743 6,734
FLEET
Average number of owned operating vessels 25.0 26.7
(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 (revenues less voyage
expenses) divided by revenue days.
Revenue days are the total number of
calendar days the vessels are in the
Company's possession less off-hire
days generally associated with
drydocking or repairs, and idle days
associated with repositioning of
vessels held for sale. Net revenue
utilized to calculate TCE is
determined on a discharge to
discharge basis, which is different
from how the Company records revenue
under U.S. GAAP. Under discharge to
discharge, revenues are recognized
beginning from the discharge of
cargo from the prior voyage to the
anticipated discharge of cargo in
the current voyage, and voyage
expenses are recognized as incurred.
(3) Fleet operating expenses per day are
routine operating expenses and
comprise crewing, repairs and
maintenance, insurance, stores, lube
oils and communication expenses.
(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 March 31, 2020
(Expressed in Millions of U.S. Dollars, other than per share amount)
Vessel IMO Built Country DWT
Cargo
Engine Type
Cargo Inerting
Eco
Estimated Resale
Estimated
Newbuilding Depreciated
Capacity (m(3)) Segregations System Specification
Price (1) Replacement
March 31, 2020
Value (2)
Seavaliant
IMO2/3
Feb-13
S. Korea 49,998 53,361
6S50 ME-C8.2 6
IG Plant
Eco-Design $39.00 $28.85
Seaventure
IMO2/3
Jun-13
S. Korea 49,998 53,375
6S50 ME-C8.2 6
IG Plant
Eco-Design $39.00 $29.24
Seavantage
IMO2/3
Jan-14
S. Korea 49,997 53,288
6S50 ME-B9.2 6
IG Plant
Eco-Design $39.00 $30.12
Seavanguard
IMO2/3
Feb-14
S. Korea 49,998 53,287
6S50 ME-B9.2 6
IG Plant
Eco-Design $39.00 $30.23
Sealion
IMO2/3
May-15
S. Korea 49,999 52,928
6S50 ME-B9.2 6
IG Plant
Eco-Design $39.00 $32.06
Seafox
IMO2/3
Jun-15
S. Korea 49,999 52,930
6S50 ME-B9.2 6
IG Plant
Eco-Design $39.00 $32.18
Seawolf
IMO2/3
Aug-15
S. Korea 49,999 52,931
6S50 ME-B9.2 6
IG Plant
Eco-Design $39.00 $32.37
Seahawk
IMO2/3
Nov-15
S. Korea 49,999 52,931
6S50 ME-B9.2 6
IG Plant
Eco-Design $39.00 $32.68
Endeavour
IMO2/3
Jul-13
S. Korea 49,997 53,637
6S50 ME-C8.2 6
IG Plant
Eco-Design $39.00 $29.41
Enterprise
IMO2/3
Sep-13
S. Korea 49,453 52,774
6S50 ME-B9.2 6
IG Plant
Eco-Design $39.00 $29.64
Endurance
IMO2/3
Dec-13
S. Korea 49,466 52,770
6S50 ME-B9.2 6
IG Plant
Eco-Design $39.00 $29.97
Encounter
IMO2/3
Jan-14
S. Korea 49,494 52,776
6S50 ME-B9.2 6
IG Plant
Eco-Design $39.00 $30.05
Explorer
IMO2/3
Jan-14
S. Korea 49,478 52,775
6S50 ME-B9.2 6
IG Plant
Eco-Design $39.00 $30.14
Exporter
IMO2/3
Feb-14
S. Korea 49,466 52,770
6S50 ME-B9.2 6
IG Plant
Eco-Design $39.00 $30.25
Engineer
IMO2/3
Mar-14
S. Korea 49,420 52,789
6S50 ME-B9.2 6
IG Plant
Eco-Design $39.00 $30.35
Seamariner
IMO3
Oct-06
Japan 45,726 52,280
6S50MC-6.1 3
Flue Gas
Eco-Mod $39.00 $19.49
Sealeader
IMO3
Jun-08
Japan 47,451 52,527
6S50MC-6.1 3
Flue Gas
Eco-Mod $39.00 $21.82
Sealifter
IMO3
Aug-08
Japan 47,463 52,534
6S50MC-6.1 3
Flue Gas
Eco-Mod $39.00 $22.11
Sealancer
IMO3
Jul-08
Japan 47,472 52,467
6S50MC-6.1 3
Flue Gas
Eco-Mod $39.00 $21.94
Dauntless
IMO2
Feb-15
S. Korea 37,764 41,620
6S50 ME-B9.2 14
Nitrogen
Eco-Design $37.50 $30.36
Defender
IMO2
Feb-15
S. Korea 37,791 41,620
6S50 ME-B9.2 14
Nitrogen
Eco-Design $37.50 $30.40
Cherokee
IMO2
Jan-15
Japan 25,215 28,475
6S46 ME-B8.3 12
Nitrogen
Eco-Design $31.50 $25.31
Cheyenne
IMO2
Mar-15
Japan 25,217 28,490
6S46 ME-B8.3 12
Nitrogen
Eco-Design $31.50 $25.57
Chinook
IMO2
Jul-15
Japan 25,217 28,483
6S46 ME-B8.3 12
Nitrogen
Eco-Design $31.50 $25.93
Chippewa
IMO2
Nov-15
Japan 25,217 28,493
6S46 ME-B8.3 12
Nitrogen
Eco-Design $31.50 $26.28
$706.75
Cash /Debt /Working Capital /Other
Assets ($339.88)
Total Asset Value (Assets) (5) $366.87
DRV / Share (3)(5) $11.04
Ardmore Commercial Management (4) $27.43
Total Asset Value (Assets & Commercial
Mgt.) (5) $394.30
DRV / Share (3)(5) $11.87
1. Based on the average of two broker
estimates of prompt resale for a
newbuild vessel of equivalent
deadweight tonne at a yard in South
Korea as at March 31, 2020.
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
33,225,535 shares outstanding as at
March 31, 2020.
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 voyage
expenses 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 ((1))
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 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
Three months ended
March 31, 2020
December 31, 2019
Number of Vessels in Operation (at period end) 25 25
Fleet Average Age 6.7 6.4
CO2 Emissions Generated in Metric Tonnes 96,940 98,650
Annual Efficiency Ratio (AER) for the period (2)
---
Fleet
6.07g / tm
6.46g / tm
MR Eco-Design
5.51g / tm
6.20g / tm
MR Eco-Mod
6.56g / tm
6.05g / tm
Chemical
8.25g / tm
8.08g / tm
Energy Efficiency Operational Indicator (EEOI) for the period (3)
Fleet
12.03g / ctm
12.92g / ctm
MR Eco-Design
11.15g / ctm
13.33g / ctm
MR Eco-Mod
12.28g / ctm
12.96g / ctm
Chemical
16.26g / ctm
11.84g / ctm
tm = tonne-mile
ctm = cargo 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((4)) 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 Ardmore's emissions data is based on
the reporting tools and information
reasonably available to Ardmore and its
applicable third-party technical
managers. Management assesses such data
and may adjust and restate the data to
reflect latest information
2 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
(3) Energy Efficiency Operational
Indicator ("EEOI") is a tool for
measuring CO2 gas emissions in a given
time period per unit of 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
4 Some shipping companies report CO2 in
tonnes per kilometre as opposed to CO2
in tonnes per nautical mile
Non-GAAP Measures
This press release describes EBITDA, Adjusted EBITDA and Adjusted earnings / (loss), 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. Adjusted earnings / (loss) excludes certain items from net income / (loss), including gain or loss on sale of vessels and write-off of deferred finance fees, because they are considered to be not representative of its operating performance.
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 Adjusted earnings / (loss) 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 income / (loss) to EBITDA and Adjusted EBITDA
Three months ended
March 31, 2020
March 31, 2019
Net income / (loss) 6,518,681 (9,153,779)
Interest income (144,202) (238,338)
Interest expense and finance costs 5,446,621 6,957,660
Income tax 30,503 33,620
Depreciation 7,854,959 8,230,492
Amortization of deferred drydock expenditures 1,285,342 1,138,763
EBITDA 20,991,904 6,968,418
Loss on sale of vessel - 6,569,763
ADJUSTED EBITDA 20,991,904 13,538,181
Reconciliation of net income / (loss) to Adjusted earnings / (loss)
Three months ended
March 31, 2020
March 31, 2019
Net income / (loss) 6,518,681 (9,153,779)
Loss on sale of vessel - 6,569,763
Adjusted earnings / (loss) ([3]) 6,518,681 (2,584,016)
Adjusted earnings / (loss) per share, basic 0.20 (0.08)
Adjusted earnings / (loss) per share, diluted 0.20 (0.08)
Weighted average number of shares, basic 33,196,917 33,097,831
Weighted average number of shares, diluted 33,317,114 33,097,831
1 Adjusted earnings /(loss) has
been calculated as Earnings per
share reported under US GAAP as
adjusted for unrealized and
realized gains and losses and
extraordinary items.
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, the use of tankers for storage purposes and the sustainability of current market improvement; the Company's liquidity, financial flexibility and strength; the Company's capital allocation policy and intended actions; the effect of the novel coronavirus pandemic on the Company's business, financial condition and the results of operation; the effect on tanker demand of the IMO 2020 regulations; 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; expected employment of the Company's vessels during the second quarter of 2020; expected drydocking days in the second quarter of 2020; 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: the amount of the world tanker fleet used for storage purposes; 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; the effect of the novel coronavirus pandemic on, among others, oil demand, the Company's business, financial condition and results of operation, including our liquidity; changes in the Company's operating expenses, including bunker prices, drydocking and insurance costs; general domestic and international political conditions; potential disruption of shipping routes due to accidents, piracy or political events; the market for the Company's vessels; competition in the tanker industry; availability of financing and refinancing; charter counterparty performance; changes in governmental rules and regulations or actions taken by regulatory authorities; the Company's ability to charter vessels for all remaining revenue days during the second quarter of 2020 in the spot market; vessels breakdowns and instances of off-hire; and other factors. Please see the Company's filings with the U.S. Securities and Exchange Commission, including the Company's Form 20-F for the year ended December 31, 2019, 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
