Ardmore Shipping Corporation Announces Financial Results For The Three And Six Months Ended June 30, 2020

Hamilton, Bermuda - July 28, 2020

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.

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Ardmore Shipping Corporation press release