ARDMORE SHIPPING CORPORATION First Quarter 2018 Earnings - - PowerPoint PPT Presentation

ARDMORE SHIPPING CORPORATION First Quarter 2018 Earnings Presentation

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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, 2017. 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.

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Earnings Release: First Quarter 2018

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

Agenda

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Highlights

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Performance and Recent Market Activity

Highlights

• Reporting EBITDA of $9.9 million and a net loss of $5.2 million, or $0.16 per

share, for the first quarter, reflecting lower than expected operating performance as a result of market positioning (Atlantic Basin) and timing of expenses

• MR spot market remains challenged; periods of strength early in 1Q18 followed

by reduced refinery throughput in February / March putting downward pressure

• n charter rates, particularly in the Atlantic Basin
• Overall, Ardmore delivered satisfactory chartering performance; MR product

tankers earned $12,721 per day for 1Q18 representing a slight increase on 4Q17 while, chemical tankers performed well at $13,504 per day

• Took delivery of the Ardmore Sealancer in January 2018, a highly efficient,

2008 built Japanese MR with attractively priced financing under a JOLCO structure

• Agreed to terms for refinancing of two 2013-built MRs under sale and

leaseback arrangement with top-tier Asian financier on highly attractive pricing and terms

• Market outlook positive; we believe we will reach an inflection point this

summer, with refinery throughput set to increase significantly over the next four months, oil demand growth is very strong, and product inventories well below five-year average(1)

• Looking ahead, 2020 sulphur cap now coming into focus; positive demand

impact for MRs, also will benefit more fuel efficient “Eco” vessels

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1. IEA April Oil Market Monthly

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Fleet Profile

1. Average age as at Mar 31, 2018

 Modern, highly fuel efficient fleet of MRs  Average age of 5.7 years  Built at high-quality yards in Korea and Japan  Quality fleet = lower operating cost, higher utilization and maximum value appreciation  Complementary fleet  Increased scale improves commercial flexibility High Quality Vessels

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 Sealancer Product 47,451 — Jun-08 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 28 1,250,019 5.7(1)

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Product and Chemical Tanker Markets

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Product Tanker Market

Oil Inventory Surplus and Refinery Throughput(1) Product Tanker Orderbook and Fleet Development(3)

• ASC MR pool and spot rates averaged $12,721 per day in 1Q18, an

improvement from $12,131 per day in 4Q17

• Outlook is increasingly positive:
• Refinery throughput set to ramp; increasing 3.2 mbd from April to August to

average 83.3 mbd; which is highest level on record (1)

• Global oil demand growth is strong at 1.5 mbd in 2018, matched with

refinery capacity expansions in export-oriented locations (2)

• Refined product inventories now well below five-year averages(2)(3) which

should stimulate incremental trading activity

• Meanwhile, MR supply growth is close to zero:
• Forecasting 37 MRs to deliver over the remainder of 2018 (12 ytd)(4)
• Scrapping run rate has increased to approx. 40 MRs per year; 15 scrapped

ytd in 2018 and 10 scrapped in 4Q17(4)

• Fleet growth net of scrapping expected to be well below 1% in 2018 (4)(5)
• Other factors:
• Increasing focus on 2020 sulphur cap; may begin to be felt in mid-2019
• Downward rate pressure from LRs and crude tankers should ease in 2H18
• Oil trader sentiment more bullish on tightening oil market fundamentals(6)
• Increasing geopolitical risk and oil price volatility
• Potential scramble for crude supply this summer as refineries ramp up(1)
• Overall, we believe that the market will reach an inflection point this

summer; demand forces are significant and MR tanker supply growth close to zero

1. Source: PIRA S&P Global Platts: March Monthly Oil Market Outlook, IEA April Oil Market Report. Inventory Surplus as defined by OPEC. 2. Source: International Energy Agency, “Oil Market Report April 2018” and management’s estimates. IEA estimates oil demand growth will average 1.5 million bpd per annum in 2018 3. OPEC April Oil Market Report 4. Source: Clarksons Shipping Intelligence Network and management’s estimates. 5. Management’s estimates of deliveries for 2018, net of estimated scrapping. Management’s estimates based on 50% of 4Q18 scheduled deliveries slipping into 2018 6. Trafigura annual report for year ending Sept 30, 2017

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0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 10 20 30 40 50 60 70 80 90 100 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

OB as % Fleet Million DWT 4.7%

76.0 77.0 78.0 79.0 80.0 81.0 82.0 83.0 84.0

• 100

100 200 300 400 500 600 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18E 3Q18E Global Refinery Throughput (mpn) Inventroy Surplus (mmb) Inventory Surplus Refinery Throughput

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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 2018

OB as % Fleet Million DWT

30.00 35.00 40.00 45.00 50.00 55.00 60.00 65.00 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18

$ / Tonne

Chemical Tanker Market

• ASC Chemical tankers averaged $13,504 per day in 1Q18, up from

$13,369 per day for 4Q17; fleet now fully traded in-house and performing very well operationally and commercially

• Recent chemical market activity:
• Increase in Indian palm oil import duties displaces short-haul Malasyian

imports with long-haul edible oil volumes sourced from Atlantic Basin(3)

• UAN volumes ramping from US following 2.7 MM MT/year of capacity

additions over last two years

• Broader chemical tanker market is active but continues to be affected by

weakness in the CPP tanker market

• Expected solid demand growth for commodity chemicals coupled with

production expansions in the US and Middle East will boost exports and lengthen voyages

• Fundamental chemical demand is highly correlated to global economy;

with global GDP forecast to grow 3.9% in 2018(4), chemical tanker demand growth is expected to strengthen

• Meanwhile, orderbook continuing to decline; 7% of existing fleet (Dwt

basis):

• Stainless steel tankers 60% of orderbook / 9.9% of stainless fleet,

Coated IMO2 tankers 40% of orderbook / 5.1% of Coated IMO2 fleet(5)

• Overall net fleet growth in 2018 estimated at 3.4%(6)
• Strong 2Q18 performance to-date, with our chemical tankers trending

towards $14,250 per day for the quarter

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

1. Source: 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 April 2018 3. Platts, “Forth increase in Indian Palm Oil Import Duties in 6 Months to Benefit Domestic Farmers” March 2018 4. IMF World Economic Outlook Update, April 2018 5. Clarksons World Fleet Register, April 2018 Orderbook Statistics 6. Management’s estimates based on expected deliveries, net of estimated scrapping

7% Average of 8 Chemical Tanker Routes from Clarksons (Gross Freight before Voyage Costs) 9

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Fleet Update

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Fleet Update

Revenue Days Profile(1) Fleet Update

+3% (Y-o-Y)

• Took delivery of Ardmore Sealancer on January 23, 2018

and completed upgrades to Eco-mod

• Revenue days increase by 3% to 9,986 in 2018
• Drydocks:
• 1Q18: 20 drydock days
• 2Q18: 35 drydock days (estimate)

1. Revenue Days based on management’s estimates.

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9,741 2,416 2,509 2,509 2,552 9,986

• 2,000

4,000 6,000 8,000 10,000 12,000 2017 ACT 1Q18 ACT 2Q18 EST 3Q18 EST 4Q18 EST 2018 EST

Revenue Days

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Financial Review

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Financial Performance

1. EBITDA is a non-GAAP measure. A reconciliation of this measure is included in the appendix of this presentation 2. Does not include interest income 3. 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 4. Fleet operating costs per day are routine operating expenses and comprise crewing, repairs and maintenance, insurance, stores, lube oils and communication costs. Also included are technical management fees paid to third-party managers 5. Vessel operating costs per day include technical management fees

13 INCOME STATEMENT DATA Three months ended Three months ended US$ millions, unless otherwise stated March 31, 2018 March 31, 2017 Results EBITDA(1) 9.9 11.7 Net (loss) / income (5.2) (2.2) Net (loss) / income per share ($/share) (0.16) (0.06) General and Administrative expenses Corporate 2.9 3.0 Commercial and Chartering 0.8 0.7 Depreciation & amortization 9.5 8.4 Interest & finance(2) 5.7 4.9 OTHER OPERATING DATA Average Number of Vessels 27.7 27.0 Fleet time charter equivalent per day ($/day)(3) 12,897 12,919 Vessel operating expenses (US$ million) 17.3 15.5 Fleet operating cost per day ($/day) (4) 6,786 6,361 Eco-Design MR ($/day)(5) 6,915 6,221 Eco-Mod MR ($/day)(5) 6,632 6,459 Eco-Design Chemical ($/day)(5) 6,635 6,385

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Product and Chemical Tanker 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 28 vessels, (b) utilization of 99.7% , (c) 32.4 mln shares as of March 31, 2018. Assumes no change in tax rate, cost of debt

• r share count

For every $1,000/day increase in rates, EPS increases by $0.31 cents(2) Time Charter Equivalent ($ / day)(1)

+37% YoY

• AVG. FLEET

MR ECO-DES MR ECO-MOD

• CHEM. TANKERS

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12,996 13,452 13,959 10,736 12,376 12,938 12,534 10,768 12,583 12,042 13,163 13,369 12,897 13,146 11,806 13,504

• AVG. FLEET TCE

MR ECO-DES MR ECO-MOD CHEMICAL TANKERS 2Q17 3Q17 4Q17 1Q18

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Strong Balance Sheet

Low Financial Leverage and every $1 million increase in vessel values = $0.86 in NAV / share(4)

1. Excludes amount receivable in respect of capital leases of $2.9 mln provided to the purchasers under the sale and leaseback of the Ardmore Sealeader and Ardmore Sealifter in 2Q17 2. Debt balance includes impact of netting of deferred finance fees of $8.7 mln in 1Q18 ($8.9 mln in 4Q17) and netting of $2.9 mln receivable in respect of capital lease (as above) in both 1Q18 and 4Q17 3. Leverage calculation basis GAAP 4. 28 ships x $1 million = $28 million / 32,445,416 shares = $0.86 / share; assumes no change in share count (32,445,416 shares outstanding as at March 31, 2018)

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• Maintaining a conservative capital structure with leverage 54% and $29.6

million in net working capital BALANCE SHEET DATA As at US$ millions, unless otherwise stated March 31, 2018 December 31, 2017 Cash 35.3 39.5 Receivables, Inventories and Other Assets(1) 50.1 45.6 Vessels, Instalment Payments & Drydock 764.2 757.6 Total Assets 849.6 842.7 Payables and Accruals 20.5 17.6 Debt & Lease Obligations(2) 451.0 444.0 Equity 378.1 381.0 Total Liabilities and Equity 849.6 842.7 Debt / Debt + Equity(3) 54%. 54%.

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Liquidity Position and Debt Amortisation Schedule

1. Balance net of sellers’ credit $2.9mln 2. Excludes netting of deferred financed fees

+37% YoY

• Strong liquidity position at Mar 31, 2018 with cash of $35.2 million and $4.5 million undrawn under the revolving credit facility
• Agreed terms for the refinance of two Eco-design MRs under a sale and leaseback arrangement on attractive terms and pricing with

top-tier Asian financier releasing cash of $8.5 million

• All debt (including capital leases) is amortizing at approximately $44.5 million per year (no non-amortizing debt). Continuing to

naturally de-lever and strengthen the balance sheet

Senior Debt / Leases Amortising $44.5 million / year Debt Repayment Profile ($ mln)(1)(2)

$396.2 $464.2 $412.5 $373.4 $334.5 $295.7 $27.3 $9.4 $40.5 $51.5 $46.2 $40.5

• $50.0

$100.0 $150.0 $200.0 $250.0 $300.0 $350.0 $400.0 $450.0 $500.0 2015 2016 2017 2018E 2019E 2020E Senior Debt Capital Lease

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Company Review and Summary

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Summary

• MR spot market remained challenged with our vessels earning $12,721 per day in the quarter. Chemical tankers performed

well with rates of $13,504 per day providing a welcome lift to earnings from our exposure to an adjacent sector

• Market outlook increasingly attractive:
• Refinery throughput to increase sharply this summer by 3.2 mbd; 1.3 mpd more than the average summer increase in the

period 2012 - 2017(1)

• Oil demand growth is very strong, 1.5 mpd according to IEA, PIRA forecasting 2.2 mpd (1)
• Refined product inventories now well below five-year averages, which should help stimulate incremental oil trading activity
• MR supply growth close to zero, given lower deliveries and elevated scrapping levels (2)
• Downward pressure from LR and crude tankers should start to ease in 2H18 even with just slight improvement in those markets
• Meanwhile, we continue to focus on balance sheet strength and liquidity, as well as incremental earnings power through
• perating improvements and effective capital allocation

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1. IEA April Oil Market Monthly. PIRA Energy Monthly Oil Market Outlook 2. Clarksons Shipping Intelligence Network and management’s estimates.