ARDMORE SHIPPING CORPORATION Fourth Quarter 2014 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, including, without limitation, statements about: future operating or financial results; global and regional economic conditions and trends; pending vessel acquisitions or possible upgrades to vessels; the Company’s business strategy and expected capital spending or operating expenses; competition in the tanker industry; shipping market trends; the Company’s financial condition and liquidity, including ability to obtain financing in the future to fund capital expenditures, acquisitions and other general corporate activities; the Company’s share repurchase program; ability to enter into fixed-rate charters after the current charters expire and the Company’s ability to earn income in the spot market; expectations of the availability of vessels to purchase and the time it may take to construct new vessels and vessels’ useful lives are forward-looking statements. Although the Company believes that its expectations stated in this presentation are based on reasonable assumptions, actual results may differ 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 for the year ended December 31, 2013. This presentation is for information purposes only and does not constitute an offer to buy or sell securities of the Company. For more complete information about the Company, the information in this presentation should be read together with the Company 's filings with the SEC which may be accessed on the SEC website at www.sec.gov. 2
Agenda for Earnings Call Highlights Chartering Outlook Fleet Growth Product and Chemical Markets Financial Results Summary Appendix 3
Highlights 4
Performance and Recent Market Activity Third successive profitable quarter with net profit of $1.86 million for 4Q14 and $1.66 million for FY14. Earnings gaining momentum from improving market and growing fleet Strong chartering performance from vessel positioning and chartering strategy, with spot MR product tankers earning $18,413 / day net and MR Eco-design and Eco-mod earning overall $16,855 and $15,756 respectively Fourth quarter was expected to strengthen, given the favourable fundamentals, but the oil price drop proved to be icing on the cake, driving rates to seven-year highs Strong product tanker spot rates have extended into 1Q15 with MR Atlantic triangulation averaging $22,877 / day and Pacific triangulation averaging $19,905 / day in January 15 (1) Company will undergo significant, well-timed fleet growth in 2015, with ten deliveries boosting revenue days by approximately 70% (2) In the fourth quarter, Ardmore returned capital to shareholders at an annualized rate of 5%, through a 10 cents / share dividend and repurchase of 119,400 shares at $10.71 1. Source: ICAP: TC2 / TC 14 and TC11 / TC 4 triangulation rates as of January 30, 2015 2. Based on scheduled delivery dates as of February 2, 2015 5
Strong Fundamentals + Oil Price Drop = Rates at 7-Year Highs Baltic Clean Tanker Index vs. Crude Price Volatility (2) Commentary Baltic Clean Tanker Index OVX Crude Volatility Index $1,600 $100 Low oil price had significant impact on the product $90 $1,400 tanker market in 4Q14: $80 o $1,200 More refined products moving at sea $70 o Price volatility drove long-haul arbitrage trade $1,000 OVX Index BCTI Price $60 o Port congestion tied up tonnage $800 $50 o Bunker fuel cost down by almost 50% $40 $600 $30 $400 $20 MR spot market average in East and West in 4Q14 $200 $10 represents a 49% increase from one year ago (1) $0 $0 2007 2008 2009 2010 2011 2012 2013 2014 Low oil price expected to improve oil demand growth US Gulf Clean Product Fixtures FY14 (3) later in 2015: o Positive impact on global economy 250 o Oil substitution for other sources o Changing consumer behaviour 200 Ardmore positioned ships in both regions to provide Total # of Fixtures 150 earnings stability, with a roughly even split between east and west 100 50 0 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 1. Source: ICAP – Average of combined TC11 / TC 4 and TC 2/ TC 14 triangulation rates – 4Q14 - $23,242 – 4Q13 - $15,565 2. Source: Bloomberg, Includes all product tankers 3. Source: Bloomberg 6
Chartering Outlook 7
Positive Outlook for First Quarter Fleet Employment Profile (2) Estimated Time Charter and Spot Revenue Days: 1Q15 Vessel Employment Min. Expiration Date MR Eco-design MR Eco-mod Chemical Eco-design Chemical Eco-mod Ardmore Seavaliant Time Charter Feb-15 358 Ardmore Seaventure Time Charter Mar-15 Ardmore Seavantage Time Charter Dec-15 294 Ardmore Seavanguard Time Charter Jan-16 Ardmore Seafarer Time Charter Feb-15 244 Ardmore Seatrader Time Charter Feb-15 Ardmore Seamaster Time Charter Feb-15 3 166 155 Ardmore Centurion Time Charter Dec-15 Ardmore Seamariner Spot / Pool N/A Ardmore Sealeader Spot / Pool N/A 90 90 Ardmore Sealifter Spot / Pool N/A Ardmore Endeavour Spot / Pool N/A 4Q Est TCE: 4Q Est TCE: 4Q Est TCE: Ardmore Cherokee Spot / Pool N/A - $16,068 (1) $13,689 $14,627 Ardmore Calypso Spot / Pool N/A TC Days Spot / Pool / Open Days Ardmore Capella Spot / Pool N/A Estimated Days 1Q15 Balancing Charter Portfolio: 1Q14 vs. 1Q15 Days Comparison 1Q15 Est. 1Q 2015 1Q 2014 Operating Days 1,427 Drydock / Positioning Days 30 Revenue Days (3) 1,397 21% 3 3 Revenue Days Breakdown: 47% Time Charter Days 742 53% Spot / Pool / Open Days 655 79% TC Days Time Charter Coverage in 1Q 2015 53% Spot / Pool / Open Days 1. Rate excludes income from profit share 2. As at January 30, 2015, one of the time charters contains a profit-sharing component 3. Revenue days based on an assumed 99.5% utilization 8
Fleet Growth 9
Fleet Set to Grow 70% by End of 2015 Fleet Expansion Expected Revenue Days FY 2015 7,750 70% increase in total revenue 7,000 Newbuildings ordered at time of IPO now delivering, days in 2015 vs. 2014 6,250 majority in first half of 2015 Revenue Days 5,500 4,750 Most are planned to be engaged in spot market 4,000 through pools, four with a leading oil trader’s 3,250 proprietary ship pool 2,500 1,750 Took delivery of Ardmore Cherokee on January 6, 1,000 2015 and commenced trading spot in a product / 2014 FY Q1 Q2 Q3 Q4 2015 FY chemical pool 3 (1) Scheduled / Contracted Fleet Development Nine additional vessels delivering in 2015: 1Q15: N-2063, H-2480, H-2481 2Q15: S-1162, S-1163 4 6 3Q15: S-1171, N-2065 4Q15: S-1172, N-2067 24 22 Newbuildings on schedule and within budget 20 18 1Q 2015 2Q 2015 3Q 2015 4Q 2015 In Operation Predelivery 1. Assumes current scheduled timetable of all vessels currently under construction 10
Product and Chemical Markets 11
Product Tanker Market: Fundamental Strength MR Tanker Rates Increasing as Oil Prices Decline (1) Commentary Baltic Clean Tanker Index WTI Crude Oil Price Strength arising from ongoing secular trends: $850 $120 o Refinery relocation closer to oil fields and away from $800 $110 industrial centers means more refined products moving at sea $750 $100 WTI Crude Price o Continued growth in US Gulf product exports, augmented $700 $90 BCTI Price now by relaxation of rules for clean condensate $650 $80 o Increasing complexity of trade from oil trading and regulatory $600 $70 tightening (e.g. sulphur emissions) $550 $60 $500 $50 Unexpected oil price drop has added an extra layer of $450 $40 demand which has driven rates to seven-year highs, and is $400 $30 Jan-13 Apr-13 Jul-13 Sep-13 Dec-13Mar-14Jun-14 Sep-14 Dec-14 expected to continue impacting product tanker charter rates so long as oil pricing remains volatile Product Tanker Orderbook and Fleet Development (2) Time charter rates are lagging spot performance, a typical 160 50% 45% phenomenon at the beginning of charter market recoveries, 140 40% but should begin to follow 120 35% % OB of Fleet Million DWT 100 30% Spot rates will continue to be volatile, but at higher levels on 80 25% average than in prior years 20% 60 15% 40 10% 20 5% 0 0% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: Bloomberg, Drewry, Clarksons Shipping Intelligence Network, ICAP, internal market data 1. Bloomberg data from January 1, 2013 – December 24, 2014 2. MR Product Tanker Development 12
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