Ardmore Shipping Corporation Announces Financial Results For The Three And Six Months Ended June 30, 2020
HAMILTON, Bermuda, July 28, 2020 /PRNewswire/ -- Ardmore Shipping Corporation (NYSE: ASC) ("Ardmore", the "Company" or "we") today announced results for the three and six months ended June 30, 2020.
Highlights and Recent Activity
-- Reported net income of $13.6 million for the three months ended June 30,
2020, or $0.41 earnings per basic and diluted share, as compared to a
net loss of $9.9 million, or $0.30 loss per basic and diluted share, for
the three months ended June 30, 2019. Net loss for the three months
ended June 30, 2019 includes the loss on sale of the Ardmore Seafarer of
$6.6 million. Reported EBITDA (see Non-GAAP Measures section) of $27.9
million for the three months ended June 30, 2020 as compared to $5.7
million for the three months ended June 30, 2019.
-- Reported Adjusted earnings (see Non-GAAP Measures section) of $13.7
million for the three months ended June 30, 2020 or $0.41 Adjusted
earnings per basic share and diluted share, as compared to Adjusted loss
of $3.4 million, or $0.10 Adjusted loss per basic and diluted share, for
the three months ended June 30, 2019. Reported Adjusted EBITDA (see
Non-GAAP Measures section) of $27.9 million for the three months ended
June 30, 2020, as compared to $12.3 million for the three months ended
June 30, 2019.
-- Reported net income of $20.1 million for the six months ended June 30,
2020, or $0.61 earnings per basic and diluted share, as compared to a
net loss of $19.1 million, or $0.58 loss per basic and diluted share,
for the six months ended June 30, 2019. Net loss for the six months
ended June 30, 2019 includes aggregate loss on the sales of the Ardmore
Seamaster and Ardmore Seafarer of $13.2 million. Reported EBITDA (see
Non-GAAP Measures section) of $48.9 million for the six months ended
June 30, 2020, as compared to $12.7 million for the six months ended
June 30, 2019.
-- Reported Adjusted earnings (see Non-GAAP Measures section) of $20.2
million for the six months ended June 30, 2020, or $0.61 Adjusted
earnings per basic and diluted share, as compared to an Adjusted loss of
$5.9 million, or $0.18 Adjusted loss per basic and diluted share, for
the six months ended June 30, 2019. Reported adjusted EBITDA (see
Non-GAAP Measures section) of $48.9 million for the six months ended
June 30, 2020, as compared to $25.9 million for the six months ended
June 30, 2019.
-- MR tankers earned an average TCE rate of $21,256 per day for the three
months ended June 30, 2020 and $20,280 per day for the six months ended
June 30, 2020. Chemical tankers earned an average TCE rate of $16,337
per day for the three months ended June 30, 2020, and an average of
$17,864 per day for the six months ended June 30, 2020.
-- In May 2020, the Company entered floating-to-fixed interest rate swaps
with a total notional amount of $324 million at an average fixed
interest rate of 0.32% for a term of three years.
-- In July 2020, the Company completed its first sustainability-linked
finance facility with ABN AMRO; the new $15 million receivables facility
contains a pricing adjustment feature linked to Ardmore's performance on
carbon emission reduction and other environmental and social
initiatives. The facility's performance targets for carbon emission
reduction align with International Maritime Organization's targets for
GHG emissions reduction.
-- On July 21, 2020, the Company agreed to acquire a 50,093 Dwt 2010
Japanese-built MR product tanker for a purchase price of $16.7 million.
The vessel completed second special survey and ballast water treatment
installation in June and is expected to deliver to Ardmore in August
2020.
-- On July 23, 2020, the Company entered into an agreement to charter-in a
47,981 Dwt 2010 Japanese-built MR product tanker for one year at a rate
of approximately $13,400 per day, plus a one-year extension option.
Delivery is expected in September 2020.
-- On March 11, 2020, the World Health Organization declared the recent
novel coronavirus (COVID 19) outbreak a pandemic. In response to the
outbreak, many countries, ports and organizations, including those where
the Company conducts a large part of its operations, have implemented
measures to combat the outbreak, such as quarantines and travel
restrictions. Such measures have caused and will likely continue to
cause sever trade disruptions. The extent to which COVID-19 will impact
the Company's results of operations and financial condition, including
possible impairments, will depend on future developments, which are
highly uncertain and cannot be predicted, including new information
which may emerge concerning the severity of the virus and the actions to
contain or treat its impact, among others. Accordingly, an estimate of
the impact cannot be made at this time.
Anthony Gurnee, the Company's Chief Executive Officer, commented:
"We are pleased to report a very profitable second quarter with 41 cents in earnings per share, reflecting solid Ardmore chartering performance on the back of strong trading conditions driven by volatility and market disruption. We have taken advantage of these conditions to build cash and strengthen our balance sheet: our leverage on a net debt basis is down to 48.5% and cash and undrawn lines as of now is $82 million, therefore our capital allocation policy and priorities are working as intended.
The more recent market weakness has also presented attractive opportunities, and we are pleased to announce the acquisition of a high-quality Japanese MR built 2010 for $16.7 million. The ship completed its required second special survey and ballast water treatment system installation recently in June, saving us that cost and effectively reducing the price by $2 million in addition to enabling it to trade uninterrupted until its next docking in 2023. We have also recently chartered-in another 2010-built Japanese MR for one year at a rate of $13,400 per day plus one option year with delivery expected in September.
Meanwhile, the charter market is playing out as expected in reaction to underlying macroeconomic and oil market conditions, with the earlier spikes in rates followed by lows in recent weeks, and now with signals emerging that we are coming off a bottom. The oil market itself remains in turmoil; inventory levels remain high, global oil consumption is recovering to differing degrees across geographies and oil production is set to increase in August under the existing OPEC+ agreement.
Overall, we are very satisfied with the Company's performance throughout the first half of the year in which we have earned 61 cents per share. While the near-term outlook remains uncertain and market conditions are highly volatile, we maintain our long-term positive view and will continue with our capital allocation priorities while also sustaining our spot-market earnings power and seeking opportunities to build long-term value for our shareholders."
Summary of Recent and Second Quarter 2020 Events
Fleet
Fleet Operations and Employment
As at June 30, 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 second 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 $21,256 per day in the second quarter of 2020. The Company's 15 Eco-Design MR tankers earned an average TCE rate of $21,539 per day in the second quarter of 2020, and the Company's four Eco-Mod MR tankers earned an average TCE rate of $20,192 per day.
In the third 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 July 28, 2020, the Company had fixed approximately 50% of its total MR revenue days for the third quarter of 2020 at an average TCE rate of approximately $13,800 per day in line with market conditions but not reflective of potentially stronger rates in the back half of the quarter.
Product / Chemical Tankers (IMO 2: 25,000 Dwt - 37,800 Dwt)
At the end of the second 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 second quarter of 2020, the Company's six Eco-Design product / chemical vessels earned an average TCE rate of $16,337 per day.
In the third 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 July 28, 2020, the Company had fixed approximately 45% of its Eco-Design IMO 2 product / chemical tankers spot revenue days for the third quarter of 2020 at an average TCE rate of approximately $11,200 per day also in line with market conditions but not reflective of potentially stronger rates in the back half of the quarter.
Drydocking
The Company had no drydock or repositioning days in the second quarter of 2020. The Company does not expect to have any drydock days in the third quarter of 2020.
Capital Allocation Policy
Consistent with the Company's capital allocation policy, the Company is not declaring a dividend for the second quarter of 2020.
Financing
In May 2020, the Company entered floating-to-fixed interest rate swaps with a total notional amount of $324 million at an average fixed interest rate of 0.32% for a term of three years.
In July 2020, the Company completed its first sustainability-linked finance facility with ABN AMRO; the new $15 million receivables facility replaces Ardmore's existing receivables facility and contains pricing adjustment feature linked to Ardmore's performance on carbon emission reduction and other environmental and social initiatives. The facility's targets for carbon emission reduction align with International Maritime Organization's targets for GHG emissions reduction. The facility recognises Ardmore's current strong performance on Environmental Social and Governance ("ESG") initiatives including, carbon emission levels which significantly outperform the targets set out under the Poseidon Principles, and a very diverse organisation with employees representing 10 nationalities of which 59% are female. The pricing structure in the new facility will reward the Company for maintaining its carbon emission reduction trajectory and overall performance on ESG. The other commercial terms and conditions are improved from the prior receivables' facility and the new facility will mature in July 2022 with options to extend.
Vessel Additions
On July 21, 2020, Ardmore agreed to acquire a 50,093 Dwt, 2010 Japanese-built MR product tanker for a purchase price of $16.7 million. The vessel has recently completed its required special survey and ballast water treatment system installation enabling it to trade uninterrupted until its next docking in 2023. The vessel is scheduled to be delivered to Ardmore in late August, bringing the Company's fleet of MR product and chemical tankers to 26 vessels.
On July 23, 2020, the Company entered into an agreement to charter-in a 47,981 Dwt 2010 Japanese-built MR product tanker for one year at a rate of approximately $13,400 per day, plus a one-year extension option. Delivery is expected in September 2020.
Results for the Three Months Ended June 30, 2020 and 2019
The Company reported net income of $13.6 million for the three months ended June 30, 2020, or $0.41 earnings per basic and diluted share, as compared to a net loss of $9.9 million, or $0.30 loss per basic and diluted share, for the three months ended June 30, 2019. Net loss for the three months ended June 30, 2019 includes the loss on sale of the Ardmore Seafarer of $6.6 million. The Company reported EBITDA (see Non-GAAP Measures section) of $27.9 million for the three months ended June 30, 2020 as compared to $5.7 million for the three months ended June 30, 2019.
The Company reported Adjusted earnings (see Non-GAAP Measures section) of $13.7 million for the three months ended June 30, 2020 or $0.41 Adjusted earnings per basic share and diluted share, as compared to Adjusted loss of $3.4 million, or $0.10 Adjusted loss per basic and diluted share, for the three months ended June 30, 2019. The Company reported Adjusted EBITDA (see Non-GAAP Measures section) of $27.9 million for the three months ended June 30, 2020, as compared to $12.3 million for the three months ended June 30, 2019.
Results for the Six Months Ended June 30, 2020 and 2019
The Company reported net income of $20.1 million for the six months ended June 30, 2020, or $0.61 earnings per basic and diluted share, as compared to a net loss of $19.1 million, or $0.58 loss per basic and diluted share, for the six months ended June 30, 2019. Net loss for the six months ended June 30, 2019 includes the aggregated loss on the sales of the Ardmore Seamaster and Ardmore Seafarer of $13.2 million. The Company reported EBITDA (see Non-GAAP Measures section) of $48.9 million for the six months ended June 30, 2020 as compared to $12.7 million for the six months ended June 30, 2019.
The Company reported Adjusted earnings (see Non-GAAP Measures section) of $20.2 million for the six months ended June 30, 2020 or $0.61 earnings per basic and diluted share, as compared to an Adjusted loss of $5.9 million, or $0.18 Adjusted loss per basic and diluted share, for the six months ended June 30, 2019. The Company reported Adjusted EBITDA (see Non-GAAP Measures section) of $48.9 million for the six months ended June 30, 2020, as compared to $25.9 million for the six months ended June 30, 2019.
Management's Discussion and Analysis of Financial Results for the Three Months Ended June 30, 2020 and 2019
Revenue. Revenue for the three months ended June 30, 2020 was $68.0 million, an increase of $13.0 million from $55.0 million for the three months ended June 30, 2019.
The Company's average number of owned vessels decreased to 25.0 for the three months ended June 30, 2020, from 25.6 for the three months ended June 30, 2019, resulting in revenue days of 2,269 for the three months ended June 30, 2020, as compared to 2,285 for the three months ended June 30, 2019. The Company had 25 vessels employed directly in the spot market as at June 30, 2020 and 2019, respectively. The decrease in revenue days resulted in a decrease in revenue of $0.4 million, while changes in spot rates resulted in an increase in revenue of $13.4 million for the three months ended June 30, 2020.
Voyage Expenses. Voyage expenses were $20.9 million for the three months ended June 30, 2020, a decrease of $2.4 million from $23.3 million for the three months ended June 30, 2019. Voyage expenses decreased primarily due to the decrease in bunker prices for the three months ended June 30, 2020, compared to the three months ended June 30, 2019.
TCE Rate. The average TCE rate for our fleet was $20,072 per day for the three months ended June 30, 2020, an increase of $5,697 per day from $14,375 per day for the three months ended June 30, 2019. The increase in average TCE rate was the result of higher spot rates and lower voyage expenses, for the three months ended June 30, 2020. TCE rates represent net revenues (or revenue less voyage expenses) divided by revenue days.
Vessel Operating Expenses. Vessel operating expenses were $14.3 million for the three months ended June 30, 2020, a decrease of $0.6 million from $14.9 million for the three months ended June 30, 2019. This decrease is due to a decrease in the average number of vessels in operation for the three months ended June 30, 2020, as well as the impact of less crew changes due to COVID-19 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 $6,325 per vessel for the three months ended June 30, 2020, as compared to $6,393 per vessel for the three months ended June 30, 2019.
Depreciation. Depreciation expense for the three months ended June 30, 2020 was $7.9 million, a decrease of $0.1 million from $8.0 million for the three months ended June 30, 2019. This decrease is primarily due to a decrease in the average number of owned vessels for the three months ended June 30, 2020.
Amortization of Deferred Drydock Expenditures. Amortization of deferred drydock expenditures for the three months ended June 30, 2020 was $1.5 million, an increase of $0.4 million from $1.1 million for the three months ended June 30, 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 June 30, 2020 were $4.0 million, consistent with $3.9 million for the three months ended June 30, 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 June 30, 2020 were $0.9 million, an increase of $0.3 million from $0.6 million for the three months ended June 30, 2019. This increase is as a result of higher staff costs in the three months ended June 30, 2020.
Unrealized losses on derivatives. Unrealized losses on derivatives for the three months ended June 30, 2020 was $0.1 million compared to no unrealized losses for the three months ended June 30, 2019. The loss for the three months ended June 30, 2020 relates to derivatives entered into in May 2020 that are not designated as hedging instruments.
Loss on Sale of Vessel. No loss on sale of vessel was recognized for the three months ended June 30, 2020 compared to $6.6 million for the three months ended June 30, 2019 in relation to the sale of the Ardmore Seafarer.
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 June 30, 2020 were $4.8 million, a decrease of $2.0 million from $6.8 million for the three months ended June 30, 2019. Cash interest expense decreased by $1.9 million to $4.4 million for the three months ended June 30, 2020, from $6.3 million for the three months ended June 30, 2019, primarily due to a decreased average LIBOR during the three months ended June 30, 2020, compared to the three months ended June 30, 2019. Amortization of deferred finance fees for the three months ended June 30, 2020 were $0.4 million, a decrease of $0.1 million from $0.5 million for the three months ended June 30, 2019.
Liquidity
As at June 30, 2020, the Company had $72.9 million (December 31, 2019: $51.7 million) available in cash and cash equivalents. 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 resulting in an increase in amounts outstanding on these facilities. The following debt and lease liabilities (net of deferred finance fees) were outstanding as at the dates indicated:
As at
June 30, 2020
December 31, 2019
Cash $72,913,274 $51,723,107
Finance leases 203,879,326 212,799,694
Senior Debt 156,758,389 163,264,006
Revolving Credit Facilities 54,197,108 44,019,007
Total gross debt 414,843,823 420,082,707
Total net debt $341,921,549 $368,359,600
Conference Call
The Company plans to have a conference call on July 28, 2020 at 10:00 a.m. Eastern Time to discuss its results for the quarter ended June 30, 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 August 4, 2020 at 877-344-7529 or 412-317-0088. Enter the passcode 10145250 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 June 30, 2020
December 31, 2019
Current assets
Cash and cash equivalents 72,913,274 51,723,107
Receivables, net of allowance
for bad debts of $0.9 million
(2019: $0.9 million) 33,247,982 30,083,358
Prepaid expenses and other
assets 1,655,611 1,940,030
Advances and deposits 4,757,881 4,114,065
Inventories 6,571,304 10,158,735
Total current assets 119,146,052 98,019,295
Non-current assets
Vessels and vessel equipment,
net 645,937,320 660,823,330
Deferred drydock expenditures,
net 8,773,038 7,668,711
Ballast water treatment
systems, installation in
progress 750,120 384,408
Other non-current assets, net 812,447 917,222
Amount receivable in respect
of finance leases 2,880,000 2,880,000
Operating lease, right of use
asset 1,859,284 1,745,464
Total non-current assets 661,012,209 674,419,135
TOTAL ASSETS 780,158,261 772,438,430
LIABILITIES AND EQUITY
Current liabilities
Accounts payable 3,373,587 4,789,935
Accrued expenses 11,462,985 16,278,084
Accrued interest on debt and
finance leases 685,316 880,183
Current portion of long-term
debt 17,695,140 20,216,171
Current portion of finance
lease obligations 18,189,498 17,975,322
Current portion of derivative
liabilities 169,473 -
Current portion of operating
lease obligations 430,272 289,231
Total current liabilities 52,006,271 60,428,926
Non-current liabilities
Non-current portion of long-
term debt 192,387,568 187,066,842
Non-current portion of
finance lease obligations 188,569,828 197,704,372
Non-current portion of
derivative liabilities 703,316 -
Non-current portion of
operating lease obligations 1,135,330 1,182,522
Total non-current liabilities 382,796,042 385,953,736
Stockholders' equity
Common stock 352,067 350,192
Additional paid in capital 416,811,014 416,841,494
Accumulated other
comprehensive loss (773,419) -
Treasury stock (15,348,909) (15,348,909)
Accumulated deficit (55,684,805) (75,787,009)
Total stockholders' equity 345,355,948 326,055,768
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY 780,158,261 772,438,430
Ardmore Shipping Corporation
Unaudited Interim Condensed Consolidated Statements of Operations
(Expressed in U.S. Dollars, except for shares)
Three months ended Six months ended
June 30, 2020 June 30, 2019
June 30, 2020 June 30, 2019
Revenue, net 67,932,494 54,992,101 133,126,009 117,258,488
Commissions and voyage expenses (20,871,765) (23,279,177) (44,534,157) (50,529,301)
Vessel operating expenses (14,313,236) (14,878,738) (29,999,390) (31,717,026)
Depreciation (7,945,434) (8,032,393) (15,800,393) (16,262,885)
Amortization of deferred drydock expenditure (1,492,328) (1,114,880) (2,777,670) (2,253,643)
General and administrative expenses
Corporate (3,987,796) (3,909,557) (7,973,474) (7,492,730)
Commercial and chartering (852,364) (593,059) (1,719,751) (1,649,680)
Unrealized losses on derivatives (99,292) (99,292) -
Loss on sale of vessels - (6,592,429) (13,162,192)
Interest expense and finance costs (4,782,484) (6,805,234) (10,229,105) (13,762,894)
Interest income 73,988 318,661 218,190 556,999
Income / (loss) before taxes 13,661,783 (9,894,705) 20,210,967 (19,014,864)
Income tax (78,260) (48,300) (108,763) (81,920)
Net income / (loss) 13,583,523 (9,943,005) 20,102,204 (19,096,784)
Earnings / (loss) per share, basic 0.41 (0.30) 0.61 (0.58)
Earnings / (loss) per share, diluted 0.41 (0.30) 0.61 (0.58)
ADJUSTED EARNINGS / LOSS (1)
Adjusted earnings / (loss) 13,682,815 (3,350,576) 20,201,496 (5,934,592)
Adjusted earnings / (loss) per share, basic 0.41 (0.10) 0.61 (0.18)
Adjusted earnings / (loss) per share, diluted 0.41 (0.10) 0.61 (0.18)
Weighted average number of shares outstanding, basic 33,247,848 33,097,831 33,222,383 33,097,831
Weighted average number of shares outstanding, diluted 33,356,978 33,097,831 33,357,635 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)
Six months ended
June 30, 2020 June 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income / (loss) 20,102,204 (19,096,784)
Adjustments to reconcile net income / (loss) to net cash provided by
operating activities:
Depreciation 15,800,393 16,262,885
Amortization of deferred drydock expenditures 2,777,670 2,253,643
Share-based compensation 1,630,702 1,007,626
Loss on sale of vessel - 13,162,192
Amortization of deferred finance fees 867,309 1,022,394
Unrealized losses on derivatives 99,292
Foreign exchange (19,971) (38,379)
Deferred drydock expenditures (3,566,595) (3,664,595)
Changes in operating assets and liabilities:
Receivables (3,164,624) 3,257,864
Prepaid expenses and other assets 284,417 524,251
Advances and deposits (643,816) (680,954)
Inventories 3,587,431 3,064,005
Accounts payable (1,902,923) (3,412,629)
Accrued expenses and other liabilities (4,536,813) (2,708,301)
Accrued interest on debt and finance leases (189,254) 224,919
Net cash provided by operating activities 31,125,422 11,178,137
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of vessels - 26,557,707
Payments for acquisition of vessels and vessel equipment (860,418) (948,732)
Ballast water treatment systems, installation in progress (365,712) (285,668)
Payments for other non-current assets (61,836) (140,635)
Net cash (used in) / provided by investing activities (1,287,966) 25,182,672
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt 10,178,101 -
Repayments of long-term debt (7,904,486) (21,087,685)
Repayments of finance leases (9,261,596) (17,334,150)
Payment of dividend (1,659,308) -
Net cash (used in) financing activities (8,647,289) (38,421,835)
Net increase / (decrease) in cash and cash equivalents 21,190,167 (2,061,026)
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 72,913,274 54,842,012
Ardmore Shipping Corporation
Unaudited Other Operating Data
(Expressed in U.S. Dollars, unless otherwise stated)
Three months ended Six months ended
June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019
ADJUSTED EBITDA (1) 27,907,333 12,331,570 48,899,237 25,869,751
AVERAGE DAILY DATA
MR Tankers Spot & Pool TCE per day (2) 21,256 14,892 20,280 15,306
Fleet TCE per day (2) 20,072 14,375 19,738 14,663
Fleet operating expenses per day (3) 5,864 5,936 5,946 6,213
Technical management fees per day (4) 461 457 459 458
6,325 6,393 6,405 6,671
MR Tankers Eco-Design
TCE per day (2) 21,539 14,945 20,551 15,418
Vessel operating expenses per day (5) 6,293 6,306 6,327 6,593
MR Tankers Eco-Mod
TCE per day (2) 20,192 14,681 19,266 14,916
Vessel operating expenses per day (5) 6,463 6,872 6,511 6,879
Prod/Chem Tankers Eco-Design (25k - 38k Dwt)
TCE per day (2) 16,337 12,830 17,864 12,529
Vessel operating expenses per day (5) 6,313 6,143 6,528 6,437
FLEET
Average number of owned operating vessels 25.0 25.6 25.0 26.1
(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.
Amounts do not relate to
expenditures related to upgradings
and enhancements or other non-
routine expenditures which were
expensed during the period.
(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 June 30, 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
June 30, 2020
Value (2)
Seavaliant
IMO2/3
Feb-13
S. Korea 49,998 53,361
6S50 ME-C8.2 6
IG Plant
Eco-Design $36.00 $26.37
Seaventure
IMO2/3
Jun-13
S. Korea 49,998 53,375
6S50 ME-C8.2 6
IG Plant
Eco-Design $36.00 $26.73
Seavantage
IMO2/3
Jan-14
S. Korea 49,997 53,288
6S50 ME-B9.2 6
IG Plant
Eco-Design $36.00 $27.54
Seavanguard
IMO2/3
Feb-14
S. Korea 49,998 53,287
6S50 ME-B9.2 6
IG Plant
Eco-Design $36.00 $27.64
Sealion
IMO2/3
May-15
S. Korea 49,999 52,928
6S50 ME-B9.2 6
IG Plant
Eco-Design $36.00 $29.32
Seafox
IMO2/3
Jun-15
S. Korea 49,999 52,930
6S50 ME-B9.2 6
IG Plant
Eco-Design $36.00 $29.42
Seawolf
IMO2/3
Aug-15
S. Korea 49,999 52,931
6S50 ME-B9.2 6
IG Plant
Eco-Design $36.00 $29.60
Seahawk
IMO2/3
Nov-15
S. Korea 49,999 52,931
6S50 ME-B9.2 6
IG Plant
Eco-Design $36.00 $29.88
Endeavour
IMO2/3
Jul-13
S. Korea 49,997 53,637
6S50 ME-C8.2 6
IG Plant
Eco-Design $36.00 $26.89
Enterprise
IMO2/3
Sep-13
S. Korea 49,453 52,774
6S50 ME-B9.2 6
IG Plant
Eco-Design $36.00 $27.10
Endurance
IMO2/3
Dec-13
S. Korea 49,466 52,770
6S50 ME-B9.2 6
IG Plant
Eco-Design $36.00 $27.41
Encounter
IMO2/3
Jan-14
S. Korea 49,494 52,776
6S50 ME-B9.2 6
IG Plant
Eco-Design $36.00 $27.47
Explorer
IMO2/3
Jan-14
S. Korea 49,478 52,775
6S50 ME-B9.2 6
IG Plant
Eco-Design $36.00 $27.56
Exporter
IMO2/3
Feb-14
S. Korea 49,466 52,770
6S50 ME-B9.2 6
IG Plant
Eco-Design $36.00 $27.66
Engineer
IMO2/3
Mar-14
S. Korea 49,420 52,789
6S50 ME-B9.2 6
IG Plant
Eco-Design $36.00 $27.75
Seamariner
IMO3
Oct-06
Japan 45,726 52,280
6S50MC-6.1 3
Flue Gas
Eco-Mod $36.00 $17.78
Sealeader
IMO3
Jun-08
Japan 47,451 52,527
6S50MC-6.1 3
Flue Gas
Eco-Mod $36.00 $19.90
Sealifter
IMO3
Aug-08
Japan 47,463 52,534
6S50MC-6.1 3
Flue Gas
Eco-Mod $36.00 $20.17
Sealancer
IMO3
Jul-08
Japan 47,472 52,467
6S50MC-6.1 3
Flue Gas
Eco-Mod $36.00 $20.02
Dauntless
IMO2
Feb-15
S. Korea 37,764 41,620
6S50 ME-B9.2 14
Nitrogen
Eco-Design $33.50 $26.87
Defender
IMO2
Feb-15
S. Korea 37,791 41,620
6S50 ME-B9.2 14
Nitrogen
Eco-Design $33.50 $26.91
Cherokee
IMO2
Jan-15
Japan 25,215 28,475
6S46 ME-B8.3 12
Nitrogen
Eco-Design $30.00 $23.84
Cheyenne
IMO2
Mar-15
Japan 25,217 28,490
6S46 ME-B8.3 12
Nitrogen
Eco-Design $30.00 $24.09
Chinook
IMO2
Jul-15
Japan 25,217 28,483
6S46 ME-B8.3 12
Nitrogen
Eco-Design $30.00 $24.43
Chippewa
IMO2
Nov-15
Japan 25,217 28,493
6S46 ME-B8.3 12
Nitrogen
Eco-Design $30.00 $24.76
$647.12
Cash /Debt /Working Capital /Other
Assets ($316.21)
Total Asset Value (Assets) (5) $330.91
DRV / Share (3)(5) $9.94
Ardmore Commercial Management (4) $25.13
Total Asset Value (Assets & Commercial
Mgt.) (5) $356.05
DRV / Share (3)(5) $10.70
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 June 30, 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
33,285,255 shares outstanding as at
June 30, 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. Ardmore's reporting methodology is in line with the framework set out within the IMO's Data Collection System ("DCS") initiated in 2019.
Three months ended
Twelve months ended
June 30, 2020
March 31, 2020
December 31, 2019
September 30, 2019
June 30, 2020
Number of Vessels in Operation (at period end) 25 25 25 25 25
Fleet Average Age 6.9 6.7 6.4 6.2 6.9
CO2 Emissions Generated in Metric Tonnes (Quarterly) 96,825 96,940 98,650 115,169
CO2 Emissions Generated in Metric Tonnes (Annual) 405,655
Annual Efficiency Ratio (AER) for the period (2)
---
Fleet
5.89 g / tm
6.07 g / tm
6.46 g / tm
6.24 g / tm
6.16 g / tm
MR Eco-Design
5.67 g / tm
5.51 g / tm
6.20 g / tm
5.72 g / tm
5.76 g / tm
MR Eco-Mod
6.00 g / tm
6.56 g / tm
6.05 g / tm
6.90 g / tm
6.34 g / tm
Chemical
6.95 g / tm
8.25 g / tm
8.08 g / tm
8.46 g / tm
7.92 g / tm
Energy Efficiency Operational Indicator (EEOI) for the period (3)
Fleet
10.82 g / ctm
12.03 g / ctm
12.92 g / ctm
12.57 g / ctm
12.00 g / ctm
MR Eco-Design
10.73 g / ctm
11.15 g / ctm
13.33 g / ctm
11.37 g / ctm
11.55 g / ctm
MR Eco-Mod
10.08 g / ctm
12.28 g / ctm
12.96 g / ctm
12.24 g / ctm
11.76 g / ctm
Chemical
11.91 g / ctm
16.26 g / ctm
11.84 g / ctm
16.48 g / ctm
13.86 g / ctm
tm = tonne-mile
ctm = cargo tonne-mile
Ardmore Performance
Ardmore is continuing to perform well both AER and EEOI. The results vary quarter to quarter depending on ship activity, ballast / laden ratio, cargo carried, waiting time and time in port; however, on a trailing four quarter basis the results are more stable and reflect a continued improved in Ardmore's performance in reducing carbon emissions. This is attributable to continued investment in fuel efficiency technologies for the fleet and focus on operating performance. Overall, Ardmore's AER result for the fleet is 6.16 g/tm for the last four quarters to June 30, 2020 which is meaningfully below the Poseidon Principles AER target for 2020 of 6.8 g / tm.
(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. 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
(e.g. Some
shipping
companies
report CO2 in
tonnes per
kilometre as
opposed to CO2
in tonnes per
nautical mile)
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.
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
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 loss to EBITDA and Three months ended Six months ended
Adjusted EBITDA
June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019
Net income/ loss 13,583,523 (9,943,005) 20,102,204 (19,096,784)
Interest income (73,988) (318,661) (218,190) (556,999)
Interest expense and finance costs 4,782,484 6,805,234 10,229,105 13,762,894
Income tax 78,260 48,300 108,763 81,920
Unrealized losses on derivatives 99,292 99,292 -
Depreciation 7,945,434 8,032,393 15,800,393 16,262,885
Amortization of deferred drydock expenditure 1,492,328 1,114,880 2,777,670 2,253,643
EBITDA 27,907,333 5,739,141 48,899,237 12,707,559
Loss on sale of vessel - 6,592,429 13,162,192
ADJUSTED EBITDA 27,907,333 12,331,570 48,899,237 25,869,751
Reconciliation of net income / (loss) to Three months ended Six months ended
Adjusted earnings / (loss)
June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019
Net income/ loss 13,583,523 (9,943,005) 20,102,204 (19,096,784)
Loss on sale of vessel - 6,592,429 13,162,192
Unrealized losses on derivatives 99,292 99,292 -
Adjusted earnings / (loss) (1) 13,682,815 (3,350,576) 20,201,496 (5,934,592)
Adjusted earnings / (loss) per share, basic 0.41 (0.10) 0.61 (0.18)
Adjusted earnings / (loss) per share, diluted 0.41 (0.10) 0.61 (0.18)
Weighted average number of shares, basic 33,247,848 33,097,831 33,222,383 33,097,831
Weighted average number of shares, diluted 33,356,978 33,097,831 33,357,635 33,097,831
(1) Adjusted
earnings /
(loss) has
been
calculated as
Earnings per
share reported
under US GAAP
as adjusted
for realized
and unrealized
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 third quarter of 2020; expected drydocking days in the third 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 third 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
