ARDMORE SHIPPING CORPORATION Fourth Quarter and Full Year 2019 Earnings Presentation
Disclaimer This presentation contains certain statements that may be deemed to be “forward -looking statements” within the meaning of applicable U.S. federal securities laws. All statements, other than statements of historical facts, that address activities, events or developments that Ardmore Shipping Corporation (“Ardmore” or the “Company”) expects, projects, believes or anticipates will, or may occur in the future, are among these forward-looking statements including, without limitation, statements about: future operating or financial results, including expected profitability in fourth quarter of 2019; global and regional economic conditions and trends, including in emerging economies; the Company’s business strategy and expected operating expenses and operating leverage; the Company’s ability to benefit from tanker rate increases, including expected increases in Earnings Per Share (“EPS”) for given tanker rate increases; competition in the tanker industry; shipping market trends and market fundamentals, including expected tanker demand and scrapping levels and the sustainability of current market improvement; changes in governmental rules and regulations or actions taken by regulatory authorities and their consequences; the effect on tanker demand of the IMO 2020 regulations, including expected stockpiling and market disruption, the winter season and sanctions and the timing and duration of such effects; future tanker rates; expected tanker market fleet growth; expected timing of return of sanctioned fleets to worldwide trading fleet; the Company’s financial condition, liquidity and debt amortization; new credit facilities to refinance vessels and expected increase in cash flow as a result of refinancings and expected timing of refinancing; drydocking and expected capital expenditure including ballast water treatment systems; expected debt repayments during and debt balance at end of fourth quarter of 2019; expected contributions to earnings from any decrease in LIBOR due to Ardmore’s floating-rate obligations; future dividends; instances of off-hire and expected 2019 revenue days. Although the Company believes that its expectations stated in this presentation are based on reasonable assumptions, actual results may differ materially from those projected in the forward- looking statements. Factors that might cause or contribute to such a discrepancy include, but are not limited to, the risk factors described in the Company's filings with the Securities and Exchange Commission (the "SEC"), including the Company’s Annual Report on Form 20- F/A for the year ended December 31, 2018. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based. 2
Earnings Release: Fourth Quarter and Full Year 2019 3 Agenda ▪ Highlights ▪ Key Industry Developments ▪ Quarterly Performance ▪ Tanker Market Activity and Outlook ▪ Product Tanker Fundamentals ▪ Financial Review ▪ Summary 3
Highlights 4 Reporting adjusted net profit (1) of $2.5 million, or $0.08 per share, for 4Q19 ▪ compared to a loss of $5.7 million, or $0.17 per share, for 3Q19 ▪ Product tankers have had an excellent run since October resulting from IMO 2020 demand overlay, winter market conditions, and ongoing fundamental demand growth coupled with constrained supply ▪ In 4Q19 our MRs earned $17,725 / day and our chemical tankers $14,300 / day (2) , and so far in 1Q20 the MRs are close to $20,000 / day and chemical tankers $19,600 / day with 55% and 65% fixed respectively (3) Notwithstanding, we have hit a major “air pocket” in the form of the coronavirus ▪ outbreak, reducing China oil consumption and tanker demand, but also creating knock-on effects e.g. long-haul product arbitrage trades ▪ Leaving aside the virus outbreak whose full impact is still conjectural, Ardmore is delivering strong earnings in these market conditions with its fleet of 25 modern, fuel-efficient ships employed 100% in the spot market, where each $1,000 / day increase in rates translates into $0.27 in EPS (4) ▪ In keeping with our current dividend policy of paying out 60% of earnings from continuing operations, the Board has authorized a quarterly cash dividend of $0.05 per share ▪ Our priorities for the year ahead remain unchanged: continuing to improve operating performance, de-risking through debt reduction, and maximizing long- term value through good capital allocation, of which an effective dividend policy is an integral part Adjusted net profit is a non-GAAP measure. A definition of this measure and a reconciliation of this measure to its nearest GAAP comparable measure are included within Ardmore’s earnings release for 1. December 31, 2019 2. TCE is reported on a discharge to discharge basis. This is the net rate after deducting voyage expenses incurred, divided by revenue days, including among other expenses, all commissions and pool administration fees 4 3. 1Q20 rates to date as of February 7, 2020 4. Calculations based on existing cost structure and assume (a) fleet of 25 vessels, (b) utilization of 99.3%, (c) 33.1mln shares as at December 31, 2019. Assumes no change in tax rate, cost of debt or share count
Key Industry Developments 5 ▪ Product tankers are clearly benefiting from IMO 2020: Demand for compliant fuels (VLSFO and MGO) (1) has surged since October, with o refineries increasing throughput and redirecting feedstocks to increase gasoil production o Global availability of compliant fuels is adequate; price differential between HSFO and VLSFO has eased to below $200 / tonne (2) , while price differential between VLSFO and MGO is negligible, resulting in heightened gasoil demand o Operational delays and concerns with fuel quality have effectively reduced available tanker supply, as have ships stuck in China awaiting scrubber installations ▪ Coronavirus outbreak is now impacting product tanker market: o China consumption reportedly down 20% (3) , but government is initiating policies and funding to get industry and consumer activity back on track as soon as possible o Surplus Asian jet-fuel is already being shipped to Western Hemisphere; we expect other product slate imbalances and oil price volatility to drive additional oil trading activity ▪ Product tanker supply-demand fundamentals continue to be strong, supporting a rebound from the virus outbreak and a continued upturn: o Demand from oil consumption growth is robust despite near-term concerns; positive secular trends such as refinery developments and increasing trade complexity add to ongoing demand growth o Product tanker orderbook remains at historical lows; owners hesitant to order new vessels in face of pending regulatory change and capital constraints ▪ Tanker stock price decline in response to coronavirus outbreak looks overdone given very positive longer-term outlook 1. VLSFO = Very Low Sulfur Fuel Oil; MGO = Marine Gas Oil 2. Bebeka Daily Bunker Report, HSFO vs. VLSFO spread averaged over Rotterdam, Singapore, Fujairah and Houston prices, February 7, 2020 3. Bloomberg, February 2, 2020 5
Performance and Tanker Market 6 6
Quarterly Performance 7 ▪ Reporting net profit of $1.9 million, or $0.06 per share, and net profit from continuing operations (1) of $2.5 million, or $0.08 per share, for 4Q19, compared to GAAP net loss and net loss from continuing operations of $5.7 million, or $0.17 per share for 3Q19 ▪ Ardmore fleet TCE averaged $16,900 / day in 4Q19 and $14,690 / day for the full year, up significantly from prior periods o MR spot rates averaged $17,725 / day in 4Q19 o Chemical tankers averaged $14,284 / day in 4Q19 ▪ Charter rates settling in at much higher levels; with 55% of the days booked for 1Q20 to date MR rates are averaging $19,800 / day (2) ▪ Fleet continues to perform very well operationally; drydockings and operating expenses came in below budget for 2019 ▪ Completed drydockings for the Ardmore Cherokee in 4Q19 and for the Ardmore Dauntless in January; two remaining drydockings scheduled in 1Q20 ▪ Completed refinancing of 12 vessels for $201.5 million with our existing relationship banks in December; cash balance at year end was $51.7 million with $11 million available and undrawn Net profit from continuing operations is a non-GAAP measure. A definition of this measure and a reconciliation of this measure to its neare st GAAP comparable measure are included within Ardmore’s earnings 1. release for December 31, 2019 2. 1Q20 rates to date as of February 7, 2020 7
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