ARDMORE SHIPPING CORPORATION First Quarter 2017 Earnings - - PowerPoint PPT Presentation

ARDMORE SHIPPING CORPORATION First Quarter 2017 Earnings Presentation

Modern Fleet of Eco-design and Eco-mod built at high quality Korean and Japanese shipyards with upgrades to improve fuel efficiency and commercial capability 2

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

• perating 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, 2016. 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.

Modern Fleet of Eco-design and Eco-mod built at high quality Korean and Japanese shipyards with upgrades to improve fuel efficiency and commercial capability 3

Earnings Release: First Quarter 2017

• Performance and Recent Activity
• Product and Chemical Tanker Markets
• Fleet Update
• Financial Review
• Summary
• Appendix

Agenda

Modern Fleet of Eco-design and Eco-mod built at high quality Korean and Japanese shipyards with upgrades to improve fuel efficiency and commercial capability 4

Highlights

Modern Fleet of Eco-design and Eco-mod built at high quality Korean and Japanese shipyards with upgrades to improve fuel efficiency and commercial capability 5

Performance and Recent Market Activity

Highlights

• Reported EBITDA of $11.7 million and net loss $2.2 million,

equating to loss of $0.06 per share in the first quarter; compared to net loss of $3.7 million or $0.11 per share in fourth quarter 2016

• Recently acquired 6 x Eco-Design MR’s highly accretive, generated

$0.8 million equating to 42% increase in operating income

• Delivered satisfactory chartering performance in soft market with:
• Spot and pool MR tankers averaging $13,131 per day in 1Q17 vs.

$12,113 in 4Q16

• Chemical tankers averaging $12,907 per day in 1Q17 vs $12,502 in

4Q16

• Maintained tight control of operating costs and overhead expenses
• Demand impacted in the short-term by high levels of refined product

inventories; evidence that drawdown is well underway

• Fundamentals remain strong; demand set to exceed supply in 2017

which should result in rebound in charter rates as early as 4Q17

• Maintained dividend policy of paying out 60% of earnings from

continuing operations. Consistent with policy, the Company is declaring no dividend for 1Q17

6

High Quality Fleet

1. Average age as at Mar 31, 2017

Vessel Name Type Dwt Tonnes IMO Built Country Flag Specification Ardmore Seavaliant Product/Chemical 49,998 2/3 Feb-13 Korea MI Eco-design Ardmore Seaventure Product/Chemical 49,998 2/3 Jun-13 Korea MI Eco-design Ardmore Seavantage Product/Chemical 49,997 2/3 Jan-14 Korea MI Eco-design Ardmore Seavanguard Product/Chemical 49,998 2/3 Feb-14 Korea MI Eco-design Ardmore Sealion Product/Chemical 49,999 2/3 May-15 Korea MI Eco-design Ardmore Seafox Product/Chemical 49,999 2/3 Jun-15 Korea MI Eco-design Ardmore Seawolf Product/Chemical 49,999 2/3 Aug-15 Korea MI Eco-design Ardmore Seahawk Product/Chemical 49,999 2/3 Nov-15 Korea MI Eco-design Ardmore Endeavour Product/Chemical 49,997 2/3 Jul-13 Korea MI Eco-design Ardmore Enterprise Product/Chemical 49,453 2/3 Sep-13 Korea MI Eco-design Ardmore Endurance Product/Chemical 49,466 2/3 Dec-13 Korea MI Eco-design Ardmore Explorer Product/Chemical 49,494 2/3 Jan-14 Korea MI Eco-design Ardmore Encounter Product/Chemical 49,478 2/3 Jan-14 Korea MI Eco-design Ardmore Exporter Product/Chemical 49,466 2/3 Feb-14 Korea MI Eco-design Ardmore Engineer Product/Chemical 49,420 2/3 Mar-14 Korea MI Eco-design Ardmore Seafarer Product/Chemical 45,744 3 Aug-04 Japan MI Eco-mod Ardmore Seatrader Product 47,141 — Dec-02 Japan MI Eco-mod Ardmore Seamaster Product/Chemical 45,840 3 Sep-04 Japan MI Eco-mod Ardmore Seamariner Product/Chemical 45,726 3 Oct-06 Japan MI Eco-mod Ardmore Sealeader Product 47,463 — Aug-08 Japan MI Eco-mod Ardmore Sealifter Product 47,472 — Jul-08 Japan MI Eco-mod Ardmore Dauntless Product/Chemical 37,764 2 Feb-15 Korea MI Eco-design Ardmore Defender Product/Chemical 37,791 2 Feb-15 Korea MI Eco-design Ardmore Cherokee Product/Chemical 25,215 2 Jan-15 Japan MI Eco-design Ardmore Cheyenne Product/Chemical 25,217 2 Mar-15 Japan MI Eco-design Ardmore Chinook Product/Chemical 25,217 2 Jul-15 Japan MI Eco-design Ardmore Chippewa Product/Chemical 25,217 2 Nov-15 Japan MI Eco-design Total 27 1,202,568 4.6(1)

Modern Fleet of Eco-design and Eco-mod built at high quality Korean and Japanese shipyards with upgrades to improve fuel efficiency and commercial capability 7

Product and Chemical Tanker Market

$10,000 $12,000 $14,000 $16,000 $18,000 $20,000 $22,000 $24,000 $26,000 $28,000 $30,000 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 10 20 30 40 50 60 70 80 90 100 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

OB as % Fleet Million DWT

8

Product Tanker Market

Average MR Spot Market TCE Rates(1) Product Tanker Orderbook and Fleet Development(3)

• MR product tanker rates improved slightly in the quarter; ASC MR

Spot & Pool TCE averaged $13,131 in 1Q17 vs. $12,113 in 4Q16

• 1Q17 Activity:
• Demand continues to be negatively impacted by de-stocking from

high level of refined product inventories

• But offsetting strong demand from Latin America for US gasoline

and diesel coupled with increased activity into West Africa resulting in stronger Atlantic basin rates

• Demand Outlook:
• Demand growth estimated to be in 4-5% range; underpinned by

1.3 million bpd estimated oil consumption growth in 2017(4)

• Ongoing refinery development away from points of consumption;

7.2 million bpd additional refinery capacity by 2022(5)

• MR supply growth continues to drop; orderbook at historical lows,

pace of deliveries receding while scrapping continues:

• Deliveries 1Q17: January: 16 / February: 7 / March: 2
• 51 MRs scheduled to deliver from 2Q17 to 4Q17 (before

slippage); scrapping estimated at 20 – 25 vessels per year

• Resulting in net fleet growth of approximately 2.0% 2017 and 1%
• r less 2018(6)
• Overall, continued tightening of supply / demand balance and end

to destocking of refined products should lead to sustained increase in charter rates as early as 4Q17

1. Source: Howe Robinson Partners - Rates quoted are the average $/day rates for TC6, TC7, TC 10, TC11/4 and TC2/14 for a MR Eco-design vessel from 1Q14 to 1Q17 2. Management’s estimates based on a full fleet of 27 vessels operating in the spot market for 363 revenue days / ship and MR product tankers earning $25,0000 / day and chemical tankers earning $18,000 / day 3. Source: Clarksons Shipping Intelligence Network and management’s estimates as at Apr 18th , 2017 4. Source: International Energy Agency, “Oil Market Report Apr 2017”. IEA estimates oil demand growth will average 1.2 million bpd per annum from 2016 to 2022 (IEA: “Market Series Report: Oil 2017”) 5. Source: International Energy Agency, “Market Series Report: Oil 2017”. Gross capacity additions, excludes impact of closures 6. Management’s estimates of deliveries for 2017 and 2018, net of estimated scrapping

4.5% EPS Breakeven ASC EPS ~$2.80(2) TCE $25,000 / day

0% 10% 20% 30% 40% 50% 60% 70% 80% 5 10 15 20 25 30 35 40 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

OB as % Fleet Million DWT

• Chemical tanker market also slightly improved in 1Q17, ASC charter

rates averaging $12,907 vs $12,502 in 4Q16

• 1Q17 Activity:
• Continued strength in ethanol exports from US to South America
• Reduced demand for methanol cargoes USG / China due high prices
• Southeast Asian palm oil trade at low levels
• ASC chemical fleet: 40% CPP / 40% chemicals / 20% vegoils
• Demand Outlook:
• Commodity chemical seaborne trade expected to grow approximately

5% per annum in medium term(3)

• Vegoil market expected to strengthen through 2017 as output in

Southeast Asia increases due to favourable growing conditions

• Strengthening product tanker market will increase demand for

chemical tankers in CPP trade

• Ongoing petrochemical production increase in US and Middle East;

four ethylene crackers (5 MT capacity) expected to start up in the US

• ver next 12 months(4)
• Seaborne trade of methanol expected to grow at average of 7% per

annum to 2021(5)

• Orderbook at moderate levels; 10.3% of existing fleet (Dwt basis):
• Stainless steel tankers 71% of orderbook / 17.5% of stainless fleet,

Coated IMO2 tankers 29% of orderbook / 5.2% of Coated IMO2 fleet

• Overall net fleet growth of approximately 5% in 2017(6)

9

Chemical Tanker Market

Chemical Tanker Spot Market Performance(1) Chemical Tanker Orderbook and Fleet Development(2)

1. Source: Clarksons Platou, Clarksons SIN. Management’s estimates based average chemical tanker spot rates on selected trades (Houston-F.East / Gulf-F.East / Gulf-Med / Houston-Rotterdam / Rotterdam-Houston / Houston- Santos / Gulf-Rotterdam / Ulsan-Houston) 2. Orderbook for coated IMO2 with average tank size <3000m3 and stainless steel ships above 10,000 Dwt as at Apr 18th, 2017 3. Source: Richardson Lawrie Associates, “Chemical Carrier World to 2021”, Apr17. Estimated average growth in total deep sea commodity chemicals trade to 2021 4. Source: Deutsche Bank market research 5. Source: Richardson Lawrie Associates, “Chemical Carrier World to 2021”, Apr17 6. Management’s estimates, based on expected 2017 deliveries, net of estimated scrapping

10.3%

30.00 35.00 40.00 45.00 50.00 55.00 60.00 65.00 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17

$ / Tonne Average of 8 Chemical Tanker Routes from Clarksons (Gross Freight before Voyage Costs)

Modern Fleet of Eco-design and Eco-mod built at high quality Korean and Japanese shipyards with upgrades to improve fuel efficiency and commercial capability 10

Fleet Update

7,071 8,635 2,410 2,417 2,449 2,483 9,759

• 2,000

4,000 6,000 8,000 10,000 12,000 2015 ACT 2016 ACT 1Q17 ACT 2Q17 EST 3Q17 EST 4Q17 EST 2017 EST

Revenue Days

11

Fleet Update

Revenue Days Profile(1) Fleet Update

1. Revenue Days based on management’s estimates.

+13% (Y-o-Y)

• Revenue days to increase by 13% to 9,759 in 2017
• Drydocks:
• 1Q17: Ardmore Seavanguard intermediate survey
• 2Q17: Expect 30 drydock days

Modern Fleet of Eco-design and Eco-mod built at high quality Korean and Japanese shipyards with upgrades to improve fuel efficiency and commercial capability 12

Financial

Modern Fleet of Eco-design and Eco-mod built at high quality Korean and Japanese shipyards with upgrades to improve fuel efficiency and commercial capability 13

Financial Performance

1. EBITDA is a non-GAAP measure. A reconciliation of this measure is included in the Appendix of this presentation 2. Definitions: Time Charter Equivalent (“TCE”) daily rate is the gross charter rate or gross pool rate, as appropriate, per revenue day plus Communication Victualing and Entertainment Income (“CVE”). For vessels employed on voyage charters, TCE is the net rate after deducting voyage costs incurred by commercial managers 3. Fleet operating costs per day are routine operating expenses and comprise crewing, repairs and maintenance, insurance, stores, lube oils and communication costs. They do not include additional costs related to upgrading or enhancement of the vessels that are not capitalized 4. Technical management fees per day are fees paid to third-party technical managers 5. Vessel operating costs per day include technical management fees

INCOME STATEMENT DATA Three months ended US$ millions, unless otherwise stated Mar 31, 2017 Mar 31, 2016 Results Revenue 49.7 43.5 EBITDA(1) 11.7 18.8 Net (loss) / income (2.2) 6.7 Net (loss) / income per share ($/share) (0.06) 0.26 General and Administrative expenses Corporate 3.0 3.3 Commercial and Chartering 0.7 0.4 Depreciation & amortization 9.1 7.6 Interest & finance costs 4.9 4.4 OTHER OPERATING DATA Average Number of Vessels 27 24 Fleet time charter equivalent per day ($/day)(2) 12,919 17,131 Operating cost per day ($/day) Fleet(3) 5,971 5,830 Technical management fees(4) 390 364 Total operating costs 6,361 6,194 Eco-Design MR(5) 6,221 5,854 Eco-Mod MR(5) 6,459 6,572 Eco-Design Chemical(5) 6,385 6,236

$1.9 mln $1.9 mln $1.9 mln $0.8 mln $0.8 mln ASC (Ex. 6 x MR's) Acquired x 6 ASC Total $578,703 $450,102 ASC (Ex. 6 x MR's) ASC Total

Fleet Earnings: Most Recent Acquisition (6 x Eco-Des MR’s)

14

Corporate Overhead Per Ship Reduced(2)

Corporate Overhead per ship decreases by ~$130k per year

1. Calculation based on reported 1Q17 operating income of $2.7 million 2. Pro-forma calculation based on reported 1Q17 corporate overhead of $3.0 million annualized for full year 2017 3. Full Year Basis

• Acq. Fleet Generated $0.8 mln Operating Income 1Q17(1)

Operating Income increase of $0.8 mln equates to 42% accretion $2.7 mln

Every $1,000/day increase in rates; Operating Income and Cash Flow increases by $10 million(3)

16,645 17,254 15,376 17,547 13,889 14,769 12,258 14,432 12,307 12,389 11,910 12,502 12,919 13,181 12,260 12,907

• AVG. FLEET TCE

MR ECO-DES MR ECO-MOD PROD/CHEM ECO-DES

2Q16 3Q16 4Q16 1Q17

15

Charter Rates

1. Time Charter Equivalent (“TCE”) daily rate is the gross charter rate or gross pool rate, as appropriate, per revenue day plus Communication Victualing and Entertainment Income (“CVE”). For vessels employed on voyage charters, TCE is the net rate after deducting voyage costs incurred by commercial managers. Chemical tankers are full IMO2 rated vessels 2. Calculations based on existing cost structure and assume (a) fleet of 27 vessels, (b) utilization of 99.45% , (c) 33.6 mln shares and (d) dividend policy of paying out 60% of earnings from continuing operations. Assumes no change in tax rate, cost of debt or share count

For every $1,000/day increase in rates, EPS increases by $0.29 cents and Dividend by $0.17 cents

(2)

Time Charter Equivalent ($ / day)(1)

+37% YoY

• AVG. FLEET

MR ECO-DES MR ECO-MOD

• CHEM. TANKERS

Low Financial Leverage and every $1 million increase in vessel values = $0.80 in NAV / share(3) 16

Strong Balance Sheet

1. Debt balance includes impact of netting of deferred finance fees of $10.6 mln in 1Q17 ($11.2 mln in 4Q16) under US GAAP 2. Leverage calculation based on gross debt before netting of deferred finance fees. Gross debt of $462.2 mln 1Q17 / $473.5 mln 4Q16 3. 27 ships x $1 million = $27 million / 33.6 million shares = $0.80 / share; assumes no change in share count

BALANCE SHEET DATA As at; US$ millions, unless otherwise stated Mar 31, 2017 Dec 31, 2016 Cash 45.2 56.0 Receivables & Inventories 43.4 37.8 Vessels & Drydock 780.1 788.7 Other Assets 1.2 1.2 Total Assets 869.8 883.6 Payables and Accruals 16.0 17.0 Debt & Capital Lease Obligations(1) 451.6 462.3 Equity 402.2 404.3 Total Liabilities and Equity 869.8 883.6 Debt / Debt + Equity(2) 53.5% 53.9%

17

Conservative Capital Structure

• Book value of vessel assets $780.1 million and gross debt $462.2 million ($451.6 million net deferred finance fees) as at Mar 31,

2017(1)

• Low corporate leverage: 53.5% as at Mar 31, 2017 with significant liquidity; cash and net working capital $72.6 million
• All debt is amortizing at $44.6 million per year (No non-amortizing debt)

Debt Profile

1. Gross Debt excludes impact of netting of deferred finance fees as required under US GAAP ($462.2 mln - $10.6 mln = $451.6 mln) 2. $72.6 mln consists of $45.2 mln cash and net working capital of approximately $27.4 mln

$462.2 $429.0 $780.1 $11.1 $11.1 $11.1 $72.6

Vessel Assets, Cash & Net Working Capital Gross Debt @ 1Q17 2Q 2017 3Q 2017 4Q 2017 Pro-Forma Debt @ 4Q17

Gross Debt Vessel Assets Debt Repayments Cash & Net Working Capital

Modern Fleet of Eco-design and Eco-mod built at high quality Korean and Japanese shipyards with upgrades to improve fuel efficiency and commercial capability 18

Company Review and Summary

Modern Fleet of Eco-design and Eco-mod built at high quality Korean and Japanese shipyards with upgrades to improve fuel efficiency and commercial capability 19

Summary

• Reported EBITDA of $11.7 million and net loss $2.2 million, equating to loss of $0.06 per share in the first quarter;

compared to net loss of $3.7 million or $0.11 per share in fourth quarter of 2016

• Our recently acquired 6 x Eco-Design MR’s highly accretive, generated $0.8 million in 1Q17 equating to 42% increase

in operating income

• MR spot rates improved slightly in 1Q17 due to strong demand from Latin America coupled with increased activity into

West Africa, resulting in strong Atlantic basin rates

• Demand negatively impacted in the short-term by high levels of refined product inventories; evidence that drawdown is

well underway and may conclude in 4Q17

• Fundamentals remain strong; demand growth estimated to be 4-5% range, underpinned by 1.3 million bpd oil

consumption growth, ongoing refinery development, and increasing trade complexity

• Supply growth continues to drop; orderbook at historical lows, resulting net fleet growth approximately 2% in 2017 and

1% or lower in 2018, which sets the stage for significant rebound in charter rates as early as 4Q17

• Through a combination of fully-delivered high-quality fleet, ongoing focus on spot chartering performance and cost

efficiency, Ardmore has significant earnings power where every $1,000 / day equates to 29 cents in EPS and 17 cents in dividends(1)

1. Calculations based on existing cost structure and assume (a) fleet of 27 vessels, (b) utilization of 99.45% , (c) 33.6 mln shares and (d) dividend policy of paying out 60% of earnings from continuing operations. Assumes no change in tax rate, cost of debt or share count. No dividend payable in period where earnings are negative

Modern Fleet of Eco-design and Eco-mod built at high quality Korean and Japanese shipyards with upgrades to improve fuel efficiency and commercial capability 20

Appendix

21

Non-GAAP Measures

1. EBITDA is defined as earnings before interest, taxes, depreciation and amortization. This non-GAAP measure is presented in this presentation as the Company believes that it provides investors with a means of evaluating and understanding how Ardmore’s management evaluates operating performance. This non-GAAP measure should not be considered in isolation from, as substitutes for, or superior to financial measures prepared in accordance with US

• GAAP. In addition, this non-GAAP measure does not have a standardized meaning, and is therefore unlikely to be comparable to similar measures presented by other companies

NON-GAAP MEASURES Three months ended expressed in US$, unless otherwise stated Mar 31, 2017 Mar 31, 2016 Reconciliation of net (loss) / income to EBITDA Net (loss) / income (2,167,191) 6,739,502 Interest income (90,614) (21,140) Interest expense and finance costs 4,910,921 4,433,611 Income tax 14,500 20,000 Depreciation 8,446,753 7,051,829 Amortization of deferred dry dock expenditure 613,193 593,851 EBITDA(1) 11,727,562 18,817,653