ARDMORE SHIPPING CORPORATION Full Year and Fourth Quarter 2017 - - PowerPoint PPT Presentation

ARDMORE SHIPPING CORPORATION Full Year and Fourth Quarter 2017 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, 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.

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Earnings Release: Full Year and Fourth Quarter 2017

• Performance and Recent Activity
• Product and Chemical Tanker Markets
• Recent Value Creating Activity
• 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 $45.7 mln for the full year and $11 mln for the fourth
• quarter. Overall, net loss for the full year of $12.5 million or $0.37 per share

and $3.8 million or $0.12 per share for the fourth quarter

• MR spot market remained challenged for almost all of 2017; persistent oil

product inventory overhang, low levels of oil trading activity and reduced refinery output in September / October put downward pressure on rates

• In spite of the market, Ardmore delivered a satisfactory chartering

performance with spot and pool MR tanker rates averaging $12,975 for the full year and $12,131 for the fourth quarter.

• Completed an accretive share repurchase in November 2017; acquired 1.43

mln shares at significant discount to net asset value(1), as part of the GA Holdings secondary offering, resulting in EPS accretion of approx. 3.5%(2)

• Continuing to execute on strategy of improving ROIC and building value:
• Took delivery of the Ardmore Sealancer in January 2018, a high-quality 2008

built Japanese MR, with attractively priced financing under a JOLCO tax lease

• Purchase price equates to 30% discount to age-adjusted newbuilding value
• Market outlook remains very positive; oil demand growth is strong with

accelerating global economic growth, oil product inventories are almost in balance and MR fleet growth is less than 1%

• Maintaining dividend policy paying out 60% of earnings from continuing
• perations. Consistent with policy, the Company is declaring no dividend for

the fourth quarter

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1. Based on managements estimates and analyst consensus 2. Management’s estimates based on (i) 28 vessels, (ii) 32,445,416 shares as at Jan 31, 2018 (iii) 363 revenue days / ship, (iv) expenses as per 2017 financial statements. Accretion assumes positive earnings. Actual EPS estimates may differ materially from the estimated EPS.

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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 (1) 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 5.5(2)

1. Ardmore Sealancer delivered January 23rd, 2018 2. Average age as at Dec 31, 2017

High Quality Fleet

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Product and Chemical Tanker Markets

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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

Product Tanker Market

$0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000

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

• MR tanker rates were soft for majority of 2017 despite some strength in

2Q17 and early 3Q17. ASC MR pool and spot rates averaged $12,970 for the full year and $12,131 in 4Q17 (in line with 4Q16)

• High oil product inventories persisted throughout the year and oil trading

activity remained at low levels, putting downward pressure on charter rates.

• Nevertheless, the outlook for 2018 is positive:
• Global oil inventories declined by 370 mb over the course of 2017(4); with

year end inventories of crude and product back to 2014 levels. As futures backwardation eases, restocking and increased trading activity should resume

• Global oil demand growth of 1.3 mbd in 2018 matched with refinery

capacity expansions in export-oriented locations(5)

• China continues to grow in importance for MRs; export quotas for oil

products set to increase by 30% in 2018(6)

• Overall increased cargo volumes, increasing product imbalances and

trading activity will continue to drive tonne mile demand growth next year

• Meanwhile, MR supply growth is less than 1%:
• Forecast 42 MRs to deliver in 2018; estimate 20 – 25 scrap for full year(7)
• Resulting in net fleet growth of 1% or less 2018(8)
• Shipyard capacity remains constrained, only 7 active MR shipyards

(down from 20 shipyards in 2008)

• Continued MR tonne mile demand growth in the 4 – 5% range coupled

with limited supply growth will propel the market towards a sustained recovery

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 4Q17 2. Management’s estimates based on a full fleet of 28 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, updated share count of 32,445,416 as of Jan 4th, 2018 3. Source: Clarksons Shipping Intelligence Network and management’s estimates as at Jan 18th, 2018 4. Source: PIRA Energy Group: January Monthly Oil Market Outlook 5. Source: International Energy Agency, “Oil Market Report Jan 2018” and management’s estimates. IEA estimates oil demand growth will average 1.5 million bpd per annum in 2017 and 1.3 million bpd in 2018 6. Source: Reuters, Dec 28th 2017, “China raises 1st batch of 2018 oil product export quotas by 30 pct” 7. Management’s estimates based on 50% of 4Q18 scheduled deliveries slipping into 2018 8. Management’s estimates of deliveries for 2018, net of estimated scrapping

4.1%

EPS Breakeven ASC EPS ~$2.93(2) at $25,000 / day in TCE

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Chemical Tanker Market

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

• Chemical tanker market improved; ASC charter rates averaged

$13,369 in the fourth quarter versus $11,949 for the full year

• Recent activity:
• Combination of increased South East Asia vegoil volumes and a

shortage of vegoil capable ships enabled rates to tighten

• European Soy imports increased following EU import tariff

reduction, resulting in firmer South American volumes

• Overall, though, chemical tanker market continues to be affected

by weakness in the broader CPP market

• Fundamental chemical demand is highly correlated to global

economy; with global GDP forecast to grow 3.9% in 2018(3), chemical tanker demand growth is expected to strengthen

• Expected solid demand growth for commodity chemicals coupled

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

• Orderbook continuing to decline; 8% of existing fleet (Dwt basis):
• Stainless steel tankers 60% of orderbook / 11.3% of stainless

fleet, Coated IMO2 tankers 40% of orderbook / 5.8% of Coated IMO2 fleet(4)

• Overall net fleet growth in 2018 estimated at 3.4%(5)

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 January 2018 3. IMF World Economic Outlook Update, January 2018 4. Clarksons World Fleet Register, January 2018 Orderbook Statistics 5. Management’s estimates based on expected deliveries, net of estimated scrapping

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

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

$ / Tonne 9

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Recent Value-Creating Activity

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0.0% 5.0% 10.0% 15.0% 20.0% 25.0% A B C D E F G H I J Percent Ownership Shareholders

Focus on Building Value for Highly Diversified Shareholder Base

• Completed an accretive share repurchase in November;

acquired 1.43 mln shares at a significant discount to net asset value(1) as part of Greenbriar Equity LLC’s secondary offering, delivering EPS accretion of approx. 3.5%(3)

• Overhang fully removed as Greenbriar now fully divested of

their 17% holding; post transaction ASC has a highly diversified shareholder base with no shareholder above 10%

• wnership
• Increased public float and trading volume will be beneficial for

shareholders

• Management remains intensely focused on operating

performance and overhead costs to drive continued improvement to ROIC

• Recent transactions demonstrate Ardmore’s focus on effective

capital allocation and building long-term value;

• Acquisition of Ardmore Sealancer at a 30% discount to age

adjusted newbuilding equivalent with attractive Japanese lease financing

• Share repurchase of 1.43 mln shares in November 2017 at

steep discount to NAV

• Acquisition of six Eco-design MR’s in June 2016 from

Frontline at a price as yet unmatched; vessels delivered $2.2 mln in earnings for full year 2017

Highly Accretive Share Repurchase Transaction(1)

1. Based on managements estimates and analyst consensus This analysis is solely intended to illustrate the potential NAV / share, EPS accretion and dividend growth due to the historical assumptions described herein. The application of assumptions is illustrative only, as ASC’s actual results, including the EPS that could be attributable to the offering and share repurchases and any dividend increases, will vary materially based on a number of factors, including, among

• thers: (i) actual fleet size, (ii) the charter rates ASC actually obtains, (iii) ASC’s ability to employ the vessels and its operating and other costs, (iv) the amount of debt financing and interest rates thereon, (v) general economic and

industry conditions, (vi) actual dividends declared and (vii) whether the over-allotment option is exercised. Accordingly, the hypothetical analysis illustrated above is not intended to be forward looking guidance and you should therefore not rely on the presentation as an indication of actual future results. 2. As per September filings 3. Management’s estimates based on (i) 28 vessels, (ii) 32,445,416 shares as at Jan 31, 2018 (iii) 363 revenue days / ship, (iv) expenses as per 2016 financial statements. Accretion assumes positive earnings. Actual EPS estimates may differ materially from the estimated EPS. MR rate of $17,000/day based on analyst consensus estimates for 2018, Chemical tanker rates of $16,500/day based on $500/day discount relative to MR segment, in line with historic levels. MR rates of $21,500 / day based on ASC rates reported for full year 2015 and MR rates of $25,000 / day are based on ASC rates reported in 3Q15

Highly Diversified Shareholder Base: Top 10 Shareholders(2)

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$0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 MR TCEs @ 17k/day MR TCEs @ 21.5k/day MR TCEs @ 25k/day EPS Pre Share Repurchase Post-Transaction

No shareholder above 10% EPS accretion of 3.5% (2)

+$0.03 +$0.07 +$0.11

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Fleet Update

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Fleet Update

9,741 2,460 2,509 2,509 2,552 10,030

• 2,000

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

Revenue Days

Revenue Days Profile(1) Fleet Update

+3% (Y-o-Y)

• Took delivery of Ardmore Sealancer on January 23,

2018

• Revenue days to increase by 3% to 10,030 in 2018
• Drydocks:
• 4Q17: Ardmore Seamariner completed special

survey

• 1Q18: 18 drydock days

1. Revenue Days based on management’s estimates.

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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. 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

• n 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. Also included are technical management fees paid to third-party managers of $381 / day 4Q17 and $384 / day in YTD 4Q17 4. Vessel operating costs per day include technical management fees

INCOME STATEMENT DATA Three months ended Twelve months ended US$ millions, unless otherwise stated December 31, 2017 December 31, 2017 Results EBITDA(1) 11.0 45.7 Net (loss) / income (3.8) (12.5) Net (loss) / income per share ($/share) (0.12) (0.37) General and Administrative expenses Corporate 2.5 12.0 Commercial and Chartering 0.6 2.6 Depreciation & amortization 9.6 37.2 Interest & finance 5.2 20.9 OTHER OPERATING DATA Average Number of Vessels 27.0 27.0 Fleet time charter equivalent per day ($/day)(2) 12,583 12,709 Vessel operating expenses (US$ million) 16.1 62.9 Fleet operating cost per day ($/day) (3) 6,269 6,298 Eco-Design MR ($/day)(4) 6,170 6,185 Eco-Mod MR ($/day)(4) 6,641 6,597 Eco-Design Chemical ($/day)(4) 6,141 6,282

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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 Jan 4, 2018. Assumes no change in tax rate, cost of debt or 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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12,943 13,318 13,103 11,830 12,376 12,938 12,534 10,768 12,583 12,042 13,163 13,369 12,709 12,902 12,975 11,949

• AVG. FLEET TCE

MR ECO-DES MR ECO-MOD CHEMICAL TANKERS 1H17 3Q17 4Q17 FY17

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Strong Balance Sheet

Low Financial Leverage and every $1 million increase in vessel values = $0.86 in NAV / share(3)

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 $8.9 mln in 4Q17 ($11.2 mln in 4Q16) and netting of $2.9 mln receivable in respect of capital lease in 2Q17 3. Leverage calculation based on gross debt before netting of deferred finance fees. Gross debt of $453 mln 4Q17 / $473.5 mln 4Q16 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 Jan 4, 2018)

BALANCE SHEET DATA As at; US$ millions, unless otherwise stated Dec 31, 2017 Dec 31, 2016 Cash 39.5 56.0 Receivables & Inventories(1) 45.6 38.5 Vessels & Drydock 757.6 789.2 Total Assets 842.7 883.6 Payables and Accruals 17.6 17.0 Debt & Capital Lease Obligations(2) 444.0 462.3 Equity 381.0 404.3 Total Liabilities and Equity 842.7 883.6 Debt / Debt + Equity(3) 54% 54%

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• Maintaining a conservative capital structure with of leverage 54%
• Cash balance at Jan 31, 2018 pro-forma for the delivery of the Ardmore

Sealancer and financing is $44.8 million

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$463.5 $457.9 $424.9 $424.9 $757.6 $28.0 $5.6 $33.0 $44.8 Vessel Assets, Cash & Net Working Capital Gross Debt as at Jan 31, 2018 Debt Repayments Remaining 1Q18 Debt Repayments 2Q18 - 4Q18 Pro-Forma Gross Debt 4Q18 Pro Forma Gross Debt Vessel Assets Net Working Capital Debt Repayments Cash

Strong Liquidity Position and Debt Amortisation Schedule

• Strong liquidity position at Jan 31, 2018 with cash of $44.8 mln(1) post delivery of Ardmore Sealancer and drawdown of financing
• Attractively priced $15 mln revolving credit facility in place since Oct 2017; approx. $11.4 mln drawn down as of Jan 31, 2018 with

additional financial flexibility

• All debt (includes capital leases) is amortizing at approximately $44.4 mln per year (no non-amortizing debt).

Liquidity and Debt Repayment Profile ($ mln)(2)

1. Estimated cash balance as at Jan 31st, 2018 2. Gross debt balance as at Jan 31st, 2018 made up of; (i) debt as at Dec 31st, 2018 of $446.9 mln (ii) excludes netting of deferred finance fees of $8.9 mln (iii) inclusion of Ardmore Sealeader / Sealifter sellers credit of $2.9 mln (iv) deduction of debt repayments made Jan 2018 $5.4 mln (v) addition of Ardmore Sealancer lease drawdown of $15.9 mln ($446.9 + $8.9 - $2.9 - $5.4 mln + $15.9 mln = $463.5 mln) 3. (i) Net working capital and vessel assets as at Dec 31st, 2017 (ii) Cash as per note one

18 Pro-forma Jan 31, 2018(3) Pro-forma Debt at 4Q18 Cash Net Working Cap

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Company Review and Summary

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Summary

• Reporting EBITDA of $45.7 mln for the full year and net loss of $12.5 million or $0.37 per share
• MR spot market remained challenged for almost all of 2017; persistent oil product inventory overhang, low levels of oil

trading activity and reduced refinery output in September / October put downward pressure on rates

• In spite of the market, Ardmore delivered satisfactory chartering performance with spot and pool MR tanker rates

averaging $12,975 for the full year

• Completed an accretive share repurchase in November; acquired 1.43 mln shares at significant discount to net asset

value, as part of Greenbriar’s secondary offering, resulting in EPS accretion of approx. 3.5%

• Took delivery of the Ardmore Sealancer in January 2018, a high-quality 2008 Japanese-built MR, with attractively priced

financing under a JOLCO tax lease. Purchase price equates to 30% discount to age-adjusted newbuilding value

• Market outlook is positive and primed for a recovery; after years of challenging charter markets characterised by heavy

supply growth and oil inventory overhang, conditions are in place for a sustained upturn. This market dynamic is very similar to this stage of previous cycles. Meantime, we continue to execute and wait for the catalyst that ignites a full recovery

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