Ardmore Shipping Corporation Announces Financial Results For The Three And Nine Months Ended September 30, 2020

HAMILTON, Bermuda, Nov. 4, 2020 /PRNewswire/ -- Ardmore Shipping Corporation (NYSE: ASC) ("Ardmore", the "Company" or "we") today announced results for the three and nine months ended September 30, 2020.

Highlights and Recent Activity

  • Reported a net loss of $6.6 million for the three months ended September 30, 2020, or $0.20 loss per basic and diluted share, as compared to a net loss of $5.7 million, or $0.17 loss per basic and diluted share, for the three months ended September 30, 2019. Reported EBITDA (see Non-GAAP Measures section) of $7.2 million for the three months ended September 30, 2020 as compared to $9.6 million for the three months ended September 30, 2019.
  • Reported net income of $13.5 million for the nine months ended September 30, 2020, or $0.41 earnings per basic share / $0.40 earnings per diluted share, as compared to a net loss of $24.8 million, or $0.75 loss per basic and diluted share, for the nine months ended September 30, 2019. Net loss for the nine months ended September 30, 2019 includes the aggregate loss of $13.2 million on the sales of the Ardmore Seamaster and the previous vessel named the Ardmore Seafarer. Reported EBITDA (see Non-GAAP Measures section) of $56.1 million for the nine months ended September 30, 2020, as compared to $22.3 million for the nine months ended September 30, 2019.
  • Reported Adjusted earnings (see Non-GAAP Measures section) of $13.6 million for the nine months ended September 30, 2020, or $0.41 Adjusted earnings per basic and diluted share, as compared to an Adjusted loss of $11.6 million, or $0.35 Adjusted loss per basic and diluted share, for the nine months ended September 30, 2019. Reported Adjusted EBITDA (see Non-GAAP Measures section) of $56.1 million for the nine months ended September 30, 2020, as compared to $35.4 million for the nine months ended September 30, 2019.
  • MR tankers earned an average TCE rate of $12,983 per day for the three months ended September 30, 2020 and $17,854 per day for the nine months ended September 30, 2020. Chemical tankers earned an average TCE rate of $11,037 per day for the three months ended September 30, 2020, and $15,442 per day for the nine months ended September 30, 2020.
  • In September 2020, the Company's Board of Directors authorized a new share repurchase plan in order to repurchase shares opportunistically in the open market or in privately negotiated transactions. The new plan expands and replaces the Company's earlier plan and will remain effective for up to three years.
  • The Company agreed to terms for the $10 million financing for the Ardmore Seafarer, a 2010 Japanese built MR product tanker delivered in August 2020, with a Japanese bank on attractive terms. The draw down is expected to take place in November 2020.

Anthony Gurnee, the Company's Chief Executive Officer, commented:

"Following a very strong first half of 2020, charter rates for product tankers experienced a sharp decline in the third quarter as a result of the pandemic, which is now extending into the fourth quarter. Oil demand and in particular jet fuel remains well below levels at the start of the year, and oil trading activity has been much more muted compared to levels experienced in the first half. 

We still expect a winter market rate rise, but not to the usual extent given weak underlying oil demand. There could be surprise to upside for tankers going into 2021 in the form of oil price volatility as OPEC balances output, price, and quota compliance.  Furthermore, output cuts from older, less efficient refineries should incrementally support product tanker demand in a market recovery phase in 2021.  Chemical tankers should fare particularly well in a recovery given the high correlation of chemical demand growth to global GDP growth.  

Meanwhile, Ardmore is continuing to prioritize financial strength, with a strong balance sheet and financial flexibility: net leverage is 49% and cash and undrawn lines are $60 million, and we are pleased to have agreed to terms for a $10 million senior loan facility on attractive terms with a Japanese bank.

 Looking post-pandemic to the medium-term, and based on the most recent IEA forecasting, we expect product tanker tonne-mile demand to recover fully and then continue on a 2-3% growth trajectory to 2030, which is slower than the past but still supportive of a healthy product tanker market.  At the same time we embrace the pending energy transition which is expected to have a profound impact on the shipping industry. Of particular importance to the next few years is the IMO's proposed EEXI efficiency standards for existing ships which is expected to accelerate the marginalization and retirement of older tonnage. 

 The market outlook and energy transition pose many challenges for the tanker sector, but also opportunity for companies such as Ardmore with already modern, fuel-efficient fleets that will meet the new EEXI standards, an ongoing focus on fuel efficiency, a solid financial profile, and a singular focus on long-term shareholder value."

Summary of Recent and Third Quarter 2020 Events

Fleet

Fleet Operations and Employment

As at September 30, 2020, the Company had 27 vessels in operation, including 21 Eco MR tankers ranging from 45,000 deadweight tonnes (Dwt) to 49,999 Dwt (15 Eco-Design and six Eco-Mod) and six Eco-Design IMO 2 product / chemical tankers ranging from 25,000 Dwt to 37,800 Dwt.

MR Tankers (45,000 Dwt – 49,999 Dwt)

At the end of the third quarter of 2020, the Company had 21 Eco MR tankers trading in the spot market or on short-term time charters. The Eco MR tankers earned an average TCE rate of $12,983 per day in the third quarter of 2020. The Company's 15 Eco-Design MR tankers earned an average TCE rate of $13,036 per day in the third quarter of 2020, and the Company's five Eco-Mod MR tankers earned an average TCE rate of $12,291 per day.

In the fourth 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 charters. As of November 4, 2020, the Company had fixed approximately 40% of its total MR revenue days for the fourth quarter of 2020 at an average TCE rate of approximately $10,500 per day.

Product / Chemical Tankers (IMO 2: 25,000 Dwt – 37,800 Dwt)

At the end of the third 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 third quarter of 2020, the Company's six Eco-Design product / chemical vessels earned an average TCE rate of $11,037 per day.

In the fourth 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 November 4, 2020, the Company had fixed approximately 55% of its Eco-Design IMO 2 product / chemical tankers spot revenue days for the fourth quarter of 2020 at an average TCE rate of approximately $11,650 per day.

Drydocking

The Company had no drydock or repositioning days in the third quarter of 2020. The Company expects to have 120 drydock days in the fourth quarter of 2020.

Capital Allocation Policy

Consistent with the Company's capital allocation policy, the Company is not declaring a dividend for the third quarter of 2020.

Share Repurchase Plan

In September 2020, the Company's Board of Directors authorized a new share repurchase plan, expanding and replacing the Company's earlier plan. Pursuant to the new share repurchase plan, the Company may purchase up to $30 million of its common shares through September 30, 2023, at times and prices that are considered to be appropriate by the Company. The Company expects to repurchase these shares in the open market or in privately negotiated transactions, but is not obligated under the terms of the plan to repurchase any shares, and at any time, the Company may suspend, delay or discontinue the plan.

Vessel Additions

On August 19, 2020 Ardmore took delivery of the Ardmore Seafarer, a 49,999 Dwt 2010 Japanese-built MR product tanker acquired for a purchase price of $16.7 million, and on September 19, 2020 Ardmore took delivery of a 48,000 Dwt 2010 Japanese-built MR product tanker on a time charter-in arrangement for one year.

Financing

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 a 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 the International Maritime Organization's targets for GHG emissions reduction. The facility reflects Ardmore's current strong performance on Environmental Social and Governance ("ESG") initiatives, including (a) carbon emission levels which significantly outperform the targets set out under the Poseidon Principles, (a global framework for responsible ship finance to help incentivize decarbonisation in the shipping industry) and (b) having a very diverse organization with employees representing 10 nationalities and 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 Company's prior receivables' facility and the new facility matures in July 2022 with options to extend.

In October 2020, the Company agreed to terms for a $10 million loan facility for the Ardmore Seafarer, a 2010 Japanese MR product tanker delivered in August 2020, with a Japanese bank. The facility will have a duration of five years and is priced at LIBOR plus a margin of 2.25%. The covenants and other conditions of the facility are consistent with those of Ardmore's existing debt facilities. Ardmore expects to complete documentation and close the financing in November 2020.

COVID-19

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 severe 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 measures taken to contain or treat its impact, among others. Accordingly, an estimate of the impact cannot be made at this time.

Results for the Three Months Ended September 30, 2020 and 2019

The Company reported a net loss of $6.6 million for the three months ended September 30, 2020, or $0.20 loss per basic and diluted share, as compared to a net loss of $5.7 million, or $0.17 loss per basic and diluted share, for the three months ended September 30, 2019. The Company reported EBITDA (see Non-GAAP Measures section) of $7.2 million for the three months ended September 30, 2020 as compared to $9.6 million for the three months ended September 30, 2019.

Results for the Nine Months Ended September 30, 2020 and 2019

The Company reported net income of $13.5 million for the nine months ended September 30, 2020, or $0.41 earnings per basic share / $0.40 earnings per diluted share, as compared to a net loss of $24.8 million, or $0.75 loss per basic and diluted share, for the nine months ended September 30, 2019. Net loss for the nine months ended September 30, 2019 includes the aggregate loss of $13.2 million on the sales of the Ardmore Seamaster and the previous vessel named the Ardmore Seafarer. The Company reported EBITDA (see Non-GAAP Measures section) of $56.1 million for the nine months ended September 30, 2020, as compared to $22.3 million for the nine months ended September 30, 2019.

The Company reported Adjusted earnings (see Non-GAAP Measures section) of $13.6 million for the nine months ended September 30, 2020, or $0.41 Adjusted earnings per basic and diluted share, as compared to an Adjusted loss of $11.6 million, or $0.35 Adjusted loss per basic and diluted share, for the nine months ended September 30, 2019. The Company reported Adjusted EBITDA (see Non-GAAP Measures section) of $56.1 million for the nine months ended September 30, 2020, as compared to the $35.4 million for the nine months ended September 30, 2019.

Management's Discussion and Analysis of Financial Results for the Three Months Ended September 30, 2020 and 2019

Revenue. Revenue for the three months ended September 30, 2020 was $45.2 million, a decrease of $6.9 million from $52.1 million for the three months ended September 30, 2019.

The Company's average number of owned vessels increased to 25.5 for the three months ended September 30, 2020, from 25.0 for the three months ended September 30, 2019, resulting in revenue days of 2,334 for the three months ended September 30, 2020, as compared to 2,276 for the three months ended September 30, 2019. The Company had 26 and 25 vessels employed directly in the spot market as at September 30, 2020 and 2019, respectively. The increase in revenue days resulted in an increase in revenue of $1.3 million, while changes in spot rates resulted in a decrease in revenue of $8.2 million for the three months ended September 30, 2020.

Voyage Expenses. Voyage expenses were $16.8 million for the three months ended September 30, 2020, a decrease of $6.1 million from $22.9 million for the three months ended September 30, 2019. Voyage expenses decreased primarily due to the decrease in bunker prices for the three months ended September 30, 2020, compared to the three months ended September 30, 2019.

TCE Rate. The average TCE rate for our fleet was $12,432 per day for the three months ended September 30, 2020, a decrease of $597 per day from $13,029 per day for the three months ended September 30, 2019. The decrease in average TCE rate was the result of lower spot rates, for the three months ended September 30, 2020, as compared to the three months ended September 30, 2019. TCE rates represent net revenues (or revenue less voyage expenses) divided by revenue days.

Vessel Operating Expenses. Vessel operating expenses were $16.1 million for the three months ended September 30, 2020, an increase of $1.2 million from $14.9 million for the three months ended September 30, 2019. This increase is due to an increase in the average number of vessels in operation for the three months ended September 30, 2020, as well as the impact of 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 $6,714 per vessel for the three months ended September 30, 2020, as compared to $6,194 per vessel for the three months ended September 30, 2019.

Charter Hire Costs. Charter hire costs (relating to 11 days) were $0.2 million for the three months ended September 30, 2020, as compared to $Nil for the three months ended September 30, 2019. Ardmore chartered in one vessel in September 2020.

Depreciation. Depreciation expense for the three months ended September 30, 2020 was $8.1 million, an increase of $0.1 million from $8.0 million for the three months ended September 30, 2019. This increase is primarily due to an increase in the average number of owned vessels for the three months ended September 30, 2020.

Amortization of Deferred Drydock Expenditures. Amortization of deferred drydock expenditures for the three months ended September 30, 2020 was $1.7 million, an increase of $0.5 million from $1.2 million for the three months ended September 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 September 30, 2020 were $4.1 million, an increase of $0.2 million from $3.9 million for the three months ended September 30, 2019. This increase is primarily due to the issuance of new awards of stock appreciation rights and restricted stock units during the first and second quarters 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 September 30, 2020 were $0.8 million, consistent with $0.8 million for the three months ended September 30, 2019.

Unrealized Gains on Derivatives. Unrealized gains on derivatives for the three months ended September 30, 2020 was $0.01 million compared to $Nil for the three months ended September 30, 2019. The gain for the three months ended September 30, 2020 relates to derivatives entered into in May 2020 that are not designated as hedging instruments.

Interest Expense and Finance Costs. Interest expense and finance costs include loan interest, finance lease interest, and amortization of deferred finance fees. Interest expense and finance costs for the three months ended September 30, 2020 were $4.0 million, a decrease of $2.3 million from $6.3 million for the three months ended September 30, 2019. Cash interest expense decreased by $2.2 million to $3.6 million for the three months ended September 30, 2020, from $5.8 million for the three months ended September 30, 2019, primarily due to a decreased average LIBOR during the three months ended September 30, 2020, compared to the three months ended September 30, 2019, as well as the Company entering into three-year floating-to-fixed interest rate swap agreements with an average fixed interest rate of 0.32%. Amortization of deferred finance fees for the three months ended September 30, 2020 was $0.4 million, a decrease of $0.1 million from $0.5 million for the three months ended September 30, 2019.

Liquidity

As at September 30, 2020, the Company had $58.2 million (December 31, 2019: $51.7 million) available in cash and cash equivalents. The Company drew down an additional $7.8 million from its revolving credit facilities in the third 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



September 30, 2020


December 31, 2019

Cash


$

58,217,162


$

51,723,107








Finance leases (net of sellers' credit)



199,359,889



212,799,694

Senior Debt



151,476,221



163,264,006

Revolving Credit Facilities



51,820,255



44,019,007

Total debt



402,656,365



420,082,707








Total net debt


$

344,439,203


$

368,359,600

Conference Call

The Company plans to have a conference call on November 4, 2020 at 10:00 a.m. Eastern Time to discuss its results for the quarter ended September 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 November 11, 2020 at 877–344–7529 or 412–317–0088. Enter the passcode 10149100 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, except as indicated)









As at




September 30, 2020


December 31, 2019


ASSETS






Current assets






Cash and cash equivalents


58,217,162


51,723,107


Receivables, net of allowance for bad debts of $0.9 million (2019: $0.9 million)


19,725,099


30,083,358


Prepaid expenses and other assets


1,616,216


1,940,030


Advances and deposits


2,881,774


4,114,065


Inventories


8,921,239


10,158,735


Total current assets


91,361,490


98,019,295








Non-current assets






Vessels and vessel equipment, net


655,212,341


660,823,330


Deferred drydock expenditures, net


7,346,125


7,668,711


Advances for Ballast water treatment systems


2,633,234


384,408


Other non-current assets, net


789,066


917,222


Amount receivable in respect of finance leases


2,880,000


2,880,000


Operating lease, right-of-use asset


1,781,514


1,745,464


Total non-current assets


670,642,280


674,419,135








TOTAL ASSETS


762,003,770


772,438,430








LIABILITIES AND EQUITY






Current liabilities






Accounts payable


4,159,441


4,789,935


Accrued expenses and other liabilities


9,556,645


16,278,084


Accrued interest on debt and finance leases


815,152


880,183


Current portion of long-term debt


21,280,022


20,216,171


Current portion of finance lease obligations


18,311,346


17,975,322


Current portion of derivative liabilities


324,230



Current portion of operating lease obligations


464,918


289,231


Total current liabilities


54,911,754


60,428,926








Non-current liabilities






Non-current portion of long-term debt


182,016,454


187,066,842


Non-current portion of finance lease obligations


183,928,543


197,704,372


Non-current portion of derivative liabilities


466,902



Non-current portion of operating lease obligations


1,082,423


1,182,522


Total non-current liabilities


367,494,322


385,953,736








Stockholders' equity






Common stock


352,067


350,192


Additional paid in capital


417,617,733


416,841,494


Accumulated other comprehensive loss


(705,395)



Treasury stock


(15,348,909)


(15,348,909)


Accumulated deficit


(62,317,802)


(75,787,009)


Total stockholders' equity


339,597,694


326,055,768








TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY


762,003,770


772,438,430


 

Ardmore Shipping Corporation

Unaudited Interim Condensed Consolidated Statements of Operations

(Expressed in U.S. Dollars, except for shares)













Three months ended


Nine months ended




September 30, 2020


September 30, 2019


September 30, 2020


September 30, 2019


Revenue, net


45,206,271


52,098,723


178,332,280


169,357,211












Voyage expenses


(16,830,964)


(22,920,617)


(61,365,121)


(73,449,918)


Vessel operating expenses


(16,124,919)


(14,857,895)


(46,124,309)


(46,574,921)


Charter hire costs


(155,550)



(155,550)



Depreciation


(8,117,971)


(8,026,856)


(23,918,364)


(24,289,741)


Amortization of deferred drydock expenditures


(1,708,215)


(1,190,008)


(4,485,885)


(3,443,651)


General and administrative expenses










Corporate


(4,116,490)


(3,897,939)


(12,054,616)


(11,390,669)


Commercial and chartering


(791,220)


(843,692)


(2,546,319)


(2,493,372)


Unrealized gains / (losses) on derivatives


11,289



(88,003)



Loss on sale of vessels





(13,162,192)


Interest expense and finance costs


(4,023,165)


(6,344,892)


(14,252,270)


(20,107,786)


Interest income


37,652


235,212


255,842


792,211












(Loss) / Income before taxes


(6,613,282)


(5,747,964)


13,597,685


(24,762,828)












Income tax


(19,715)


35,246


(128,478)


(46,674)












(Loss) / Income


(6,632,997)


(5,712,718)


13,469,207


(24,809,502)












(Loss) / Earnings per share, basic


(0.20)


(0.17)


0.41


(0.75)


(Loss) / Earnings per share, diluted


(0.20)


(0.17)


0.40


(0.75)












ADJUSTED EARNINGS / LOSS (1)




















Adjusted earnings / (loss)


(6,644,286)


(5,712,718)


13,557,210


(11,647,310)


Adjusted earnings / (loss) per share, basic


(0.20)


(0.17)


0.41


(0.35)


Adjusted earnings / (loss) per share, diluted


(0.20)


(0.17)


0.41


(0.35)












Weighted average number of shares outstanding, basic


33,285,255


33,097,831


33,243,493


33,097,831


Weighted average number of shares outstanding, diluted


33,285,255


33,097,831


33,426,412


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)









Nine months ended




September 30, 2020


September 30, 2019


CASH FLOWS FROM OPERATING ACTIVITIES












Net income / (loss)


13,469,207


(24,809,502)


Adjustments to reconcile net income / (loss) to net cash provided by operating activities:






Depreciation


23,918,364


24,289,741


Amortization of deferred drydock expenditures


4,485,885


3,443,651


Share-based compensation


2,437,422


1,646,951


Loss on sale of vessels



13,162,192


Amortization of deferred finance fees


1,301,184


1,526,417


Unrealized losses on derivatives


88,003



Foreign exchange


39,537


(100,398)


Deferred drydock expenditures


(4,535,473)


(4,295,870)


Changes in operating assets and liabilities:






Receivables


10,358,259


2,757,139


Prepaid expenses and other assets


323,816


739,601


Advances and deposits


1,232,291


(912,491)


Inventories


1,237,496


3,784,136


Accounts payable


(936,126)


(4,230,783)


Accrued expenses and other liabilities


(6,422,257)


(3,696,144)


Accrued interest on debt and finance leases


(81,654)


(28,100)


Net cash provided by operating activities


46,915,954


13,276,540








CASH FLOWS FROM INVESTING ACTIVITIES






Proceeds from sale of vessels



26,557,707


Payments for acquisition of vessels and vessel equipment


(17,664,815)


(2,517,886)


Advances for Ballast water treatment systems


(2,248,826)


253,429


Payments for other non-current assets


(121,425)


(159,856)


Net cash (used in) / provided by investing activities


(20,035,066)


24,133,394








CASH FLOWS FROM FINANCING ACTIVITIES






Proceeds from long-term debt


7,801,248



Repayments of long-term debt


(12,579,795)


(26,183,384)


Repayments of finance leases


(13,948,978)


(21,915,830)


Payment of dividend


(1,659,308)



Net cash (used in) financing activities


(20,386,833)


(48,099,214)








Net increase / (decrease) in cash and cash equivalents


6,494,055


(10,689,280)








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


58,217,162


46,213,758


 

Ardmore Shipping Corporation

Unaudited Other Operating Data

(Expressed in U.S. Dollars, unless otherwise stated)












Three months ended


Nine months ended



September 30, 2020


September 30, 2019


September 30, 2020


September 30, 2019

ADJUSTED EBITDA (1)


7,187,128


9,578,580


56,086,365


35,448,331










AVERAGE DAILY DATA


















MR Tankers Spot TCE per day (2)


12,983


13,784


17,854


14,601










Fleet TCE per day (2)


12,432


13,029


17,224


14,045










Fleet operating expenses per day (3)


6,257


5,772


6,052


6,069

Technical management fees per day (4)


457


422


458


466



6,714


6,194


6,510


6,515










MR Tankers Eco-Design









TCE per day (2)


13,036


13,993


18,040


14,964

Vessel operating expenses per day (5)


6,901


6,262


6,520


6,481










MR Tankers Eco-Mod









TCE per day (2)


12,291


12,438


16,724


13,441

Vessel operating expenses per day (5)


6,770


5,982


6,604


6,577










Prod/Chem Tankers Eco-Design (25k - 38k Dwt)









TCE per day (2)


11,037


11,013


15,442


11,784

Vessel operating expenses per day (5)


6,205


6,264


6,420


6,379










FLEET









Average number of owned operating vessels


25.5


25.0


25.2


25.7


_________________________________________

(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. Amounts do not include 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 September 30, 2020

(Expressed in Millions of U.S. Dollars, other than per share amount)














































Estimated Resale 


Estimated 





















Newbuilding


Depreciated











Cargo




Cargo


Inerting


Eco


Price (1)


Replacement

Vessel


IMO


Built


Country


DWT


Capacity (m3)


Engine Type


Segregations


System


Specification


September 30, 2020


Value (2)

Seavaliant


IMO2/3


Feb–13


S. Korea


49,998


53,361


6S50 ME-C8.2


6


IG Plant


Eco-Design


$

35.00


$

25.35

Seaventure


IMO2/3


Jun–13


S. Korea


49,998


53,375


6S50 ME-C8.2


6


IG Plant


Eco-Design


$

35.00


$

25.70

Seavantage


IMO2/3


Jan–14


S. Korea


49,997


53,288


6S50 ME-B9.2


6


IG Plant


Eco-Design


$

35.00


$

26.48

Seavanguard


IMO2/3


Feb–14


S. Korea


49,998


53,287


6S50 ME-B9.2


6


IG Plant


Eco-Design


$

35.00


$

26.57

Sealion


IMO2/3


May–15


S. Korea


49,999


52,928


6S50 ME-B9.2


6


IG Plant


Eco-Design


$

35.00


$

28.20

Seafox


IMO2/3


Jun–15


S. Korea


49,999


52,930


6S50 ME-B9.2


6


IG Plant


Eco-Design


$

35.00


$

28.30

Seawolf


IMO2/3


Aug–15


S. Korea


49,999


52,931


6S50 ME-B9.2


6


IG Plant


Eco-Design


$

35.00


$

28.47

Seahawk


IMO2/3


Nov–15


S. Korea


49,999


52,931


6S50 ME-B9.2


6


IG Plant


Eco-Design


$

35.00


$

28.75

Endeavour


IMO2/3


Jul–13


S. Korea


49,997


53,637


6S50 ME-C8.2


6


IG Plant


Eco-Design


$

35.00


$

25.85

Enterprise


IMO2/3


Sep–13


S. Korea


49,453


52,774


6S50 ME-B9.2


6


IG Plant


Eco-Design


$

35.00


$

26.05

Endurance


IMO2/3


Dec–13


S. Korea


49,466


52,770


6S50 ME-B9.2


6


IG Plant


Eco-Design


$

35.00


$

26.35

Encounter


IMO2/3


Jan–14


S. Korea


49,494


52,776


6S50 ME-B9.2


6


IG Plant


Eco-Design


$

35.00


$

26.41

Explorer


IMO2/3


Jan–14


S. Korea


49,478


52,775


6S50 ME-B9.2


6


IG Plant


Eco-Design


$

35.00


$

26.50

Exporter


IMO2/3


Feb–14


S. Korea


49,466


52,770


6S50 ME-B9.2


6


IG Plant


Eco-Design


$

35.00


$

26.60

Engineer


IMO2/3


Mar–14


S. Korea


49,420


52,789


6S50 ME-B9.2


6


IG Plant


Eco-Design


$

35.00


$

26.69

Seamariner


IMO3


Oct–06


Japan


45,726


52,280


6S50MC–6.1


3


Flue Gas


Eco-Mod


$

35.00


$

17.00

Sealeader


IMO3


Jun–08


Japan


47,451


52,527


6S50MC–6.1


3


Flue Gas


Eco-Mod


$

35.00


$

19.06

Sealifter


IMO3


Aug–08


Japan


47,463


52,534


6S50MC–6.1


3


Flue Gas


Eco-Mod


$

35.00


$

19.32

Sealancer


IMO3


Jul–08


Japan


47,472


52,467


6S50MC–6.1


3


Flue Gas


Eco-Mod


$

35.00


$

19.17

Seafarer


IMO3


Jun–10


Japan


49,999


52,111


6S50MC-6.1


3


Flue Gas


Eco-Mod


$

35.00


$

21.70

Dauntless


IMO2


Feb–15


S. Korea


37,764


41,620


6S50 ME-B9.2


14


Nitrogen


Eco-Design


$

34.50


$

27.34

Defender


IMO2


Feb–15


S. Korea


37,791


41,620


6S50 ME-B9.2


14


Nitrogen


Eco-Design


$

34.50


$

27.38

Cherokee


IMO2


Jan–15


Japan


25,215


28,475


6S46 ME-B8.3


12


Nitrogen


Eco-Design


$

29.00


$

22.79

Cheyenne


IMO2


Mar–15


Japan


25,217


28,490


6S46 ME-B8.3


12


Nitrogen


Eco-Design


$

29.00


$

23.02

Chinook


IMO2


Jul–15


Japan


25,217


28,483


6S46 ME-B8.3


12


Nitrogen


Eco-Design


$

29.00


$

23.36

Chippewa


IMO2


Nov–15


Japan


25,217


28,493


6S46 ME-B8.3


12


Nitrogen


Eco-Design


$

29.00


$

23.67
























$

646.07










































Cash / Debt / Working Capital / Other Assets


$

(331.29)

















Total Asset Value (Assets) (5)


$

314.79

















DRV / Share (3)(5) 


$

9.46










































Ardmore Commercial Management (4)


$

20.03

















Total Asset Value (Assets & Commercial Mgt.) (5)


$

334.81

















DRV / Share (3)(5) 


$

10.06


























_________________________________________

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 September 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 September 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.

CO2 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 CO2 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.






















Twelve months



Three months ended


ended



September 30, 2020


June 30, 2020


March 31, 2020


December 31, 2019


September 30, 2020

Number of Owned Vessels in Operation (at period end)


26


25


25


25


26

Fleet Average Age


7.3


6.9


6.7


6.4


7.3

CO2 Emissions Generated in Metric Tonnes (Quarterly)


96,030


96,825


96,940


98,650


CO2 Emissions Generated in Metric Tonnes (Annual)






388,445

Distance Travelled (Miles) (Quarterly)


351,262


369,932


359,192


343,784


Distance Travelled (Miles) (Annual)






1,424,169

Fuel Consumed in Metric Tonnes (Quarterly)


30,335


30,484


30,583


31,526


Fuel Consumed in Metric Tonnes (Annual)






122,929












Annual Efficiency Ratio (AER) for the period (2)











Fleet


6.12 g / tm


5.89 g / tm


6.07 g / tm


6.46 g / tm


6.11g / tm

MR Eco-Design


5.81 g / tm


5.67 g / tm


5.51 g / tm


6.20 g / tm


5.78 g / tm

MR Eco-Mod


6.34 g / tm


6.00 g / tm


6.56 g / tm


6.05 g / tm


6.21 g / tm

Chemical


7.37 g / tm


6.95 g / tm


8.25 g / tm


8.08 g / tm


7.63 g / tm












Energy Efficiency Operational Indicator (EEOI) for the period (3)











Fleet


12.62 g / ctm


10.82 g / ctm


12.03 g / ctm


12.92 g / ctm


12.04 g / ctm

MR Eco-Design


12.17 g / ctm


10.73 g / ctm


11.15 g / ctm


13.33 g / ctm


11.75 g / ctm

MR Eco-Mod


13.33 g / ctm


10.08 g / ctm


12.28 g / ctm


12.96 g / ctm


12.01 g / ctm

Chemical


13.55 g / ctm


11.91 g / ctm


16.26 g / ctm


11.84 g / ctm


13.10 g / ctm












tm = tonne-mile











ctm = cargo tonne-mile











Ardmore Performance

Ardmore is continuing to perform well based on both AER and EEOI.  The results vary quarter to quarter depending on ship activity, ballast / laden ratio, cargo carried, weather, waiting time and time in port; however, on a trailing four quarter basis the results are more stable and reflect a continued improvement 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 6.11 g/tm for the last four quarters to September 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 for Ardmore's owned fleet. 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.












Three months ended


Nine months ended

Reconciliation of net (loss) / income to EBITDA and Adjusted EBITDA


September 30, 2020


September 30, 2019


September 30, 2020


September 30, 2019

Net (loss) / Income


(6,632,997)


(5,712,718)


13,469,207


(24,809,502)

Interest income


(37,652)


(235,212)


(255,842)


(792,211)

Interest expense and finance costs


4,023,165


6,344,892


14,252,270


20,107,786

Income tax


19,715


(35,246)


128,478


46,674

Unrealized (gains) / losses on derivatives


(11,289)



88,003


Depreciation


8,117,971


8,026,856


23,918,364


24,289,741

Amortization of deferred drydock expenditures


1,708,215


1,190,008


4,485,885


3,443,651

EBITDA


7,187,128


9,578,580


56,086,365


22,286,139

Loss on sale of vessels





13,162,192

ADJUSTED EBITDA


7,187,128


9,578,580


56,086,365


35,448,331

 












Three months ended


Nine months ended

Reconciliation of net (loss) / income to Adjusted (loss) / earnings


September 30, 2020


September 30, 2019


September 30, 2020


September 30, 2019

Net (loss) / Income


(6,632,997)


(5,712,718)


13,469,207


(24,809,502)

Loss on sale of vessels





13,162,192

Unrealized (gains) / losses on derivatives


(11,289)



88,003


Adjusted (loss) / earnings (1)


(6,644,286)


(5,712,718)


13,557,210


(11,647,310)










Adjusted (loss) / earnings per share, basic


(0.20)


(0.17)


0.41


(0.35)

Adjusted (loss) / earnings per share, diluted


(0.20)


(0.17)


0.41


(0.35)










Weighted average number of shares, basic


33,285,255


33,097,831


33,243,493


33,097,831

Weighted average number of shares, diluted


33,285,255


33,097,831


33,426,412


33,097,831



_________________________________________

1 

Adjusted (loss) / earnings 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 tanker demand and future growth rates; expected tanker rate increases in the winter; the price of output of, and the demand for, oil, including the impact of those factors on the tanker market; future OPEC activity; the correlation between chemical demand growth and global GDP growth, and the impact of that correlation on chemical tanker rates; the impact of energy transition, including the IMO's proposed EEXI efficiency standards, on the shipping industry and the Company; the effect of the novel coronavirus pandemic on the Company's business, financial condition and the results of operation; expected employment of the Company's vessels during the fourth quarter of 2020; expected drydocking days in the fourth quarter of 2020; management's estimate of the value of the Company's commercial management and pooling business; the potential rewards of the pricing structure in the Company's new receivables facility; the expected timing of the closing of the financing for the Ardmore Seafarer; 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; fluctuations in oil prices; 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 fourth 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

 

Cision View original content:http://www.prnewswire.com/news-releases/ardmore-shipping-corporation-announces-financial-results-for-the-three-and-nine-months-ended-september-30-2020-301166128.html

SOURCE Ardmore Shipping Corporation

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