ARDMORE SHIPPING CORPORATION JP Morgan Investor Presentation March - - PowerPoint PPT Presentation

ARDMORE SHIPPING CORPORATION JP Morgan Investor Presentation March 09, 2016

This presentation contains certain statements that are 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 forward looking statements, 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; fuel efficiency savings and the potential impact of the company’s cost structure on the share price; competition in the tanker industry; shipping market trends; the Company’s financial condition and liquidity, including ability to

• btain financing in the future to fund capital expenditures, acquisitions and other general corporate activities, the amount of future cash

flows and earnings of the Company; dividend amounts actually declared by the Company’s board of directors; the amount of cash reserves established by the Company’s board of directors; limitations on dividends contained in the Company’s credit facilities or under Marshall Islands law; additional issuances of the Company’s shares of common stock, the Company’s ability to enter into fixed-rate charters after the current charters expire and the Company’s ability to earn income in the spot market, and expectations of the availability

• f vessels to purchase, the time it may take to construct new vessels; vessel delivery dates 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"). 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. 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"). This presentation is for information purposes only and does not constitute an offer to buy or sell securities of the Company.

2

Disclaimer

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1. Low oil price, and oil price volatility, is good for the product tanker market 2. Product tankers are not dry bulk ships! 3. Product tanker market is currently strong:

• Tonne mile demand is growing
• Ship supply is tightening
• Charter rates are continuing to strengthen

Key Points to Keep in Mind

.

4

Overview of Ardmore Shipping

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• Leading public product tanker company focused on most attractive

sector over the long-term

• Owns and operates a fleet of 24 “Eco” medium size (“MR”) product

and chemical tankers. MR’s are the workhorses of the product tanker fleet

• Strategy based on service excellence and operating efficiency
• Internal management company and no transactions with affiliates
• Generated record earnings of $1.23 per share for the 12 months

ended Dec 31, 2015 with an average of 20 vessels in operation

• World class operations driving significant earnings upside:
• Every $1,000 increase in charter rates adds 34 cents to EPS &

Cashflow and increases the dividend by $0.20 / share(1)

• Attractive dividend policy – pay out of 60% of net income quarterly

1. Realized across a full fleet of 24 ships. Calculation based on: ($1,000 day x 363 revenue days x 24 ships) / 26.1mln shares = $0.34 per share. $0.34 x 60% = Dividend of $0.20 per share

Ardmore Shipping Corporation

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High Quality Fleet

 Modern “Eco” Fleet  Average age of ~4.3 yrs  Upgraded for enhanced commercial capability  Built at high-quality yards in Korea and Japan  Quality fleet = lower

• perating cost, higher

utilization and maximum value appreciation  Complementary fleet High Quality Vessels Fleet List

Vessel Name Type Dwt Built Country Specification Employment Ardmore Seavaliant IMO 2/3 49,998 Feb-13 Korea Eco-design Spot Ardmore Seaventure IMO 2/3 49,998 Jun-13 Korea Eco-design Spot Ardmore Seavantage IMO 2/3 49,997 Jan-14 Korea Eco-design Time Charter Ardmore Seavanguard IMO 2/3 49,998 Feb-14 Korea Eco-design Time Charter Ardmore Sealion IMO 2/3 49,999 May-15 Korea Eco-design Pool Ardmore Seafox IMO 2/3 49,999 Jun-15 Korea Eco-design Pool Ardmore Seawolf IMO 2/3 49,999 Aug-15 Korea Eco-design Pool Ardmore Seahawk IMO 2/3 49,999 Nov-15 Korea Eco-design Pool Ardmore Endeavour IMO 2/3 49,997 Jul-13 Korea Eco-design Spot Ardmore Seafarer IMO 3 45,744 Aug-04 Japan Eco-mod Time Charter Ardmore Seatrader Product 47,141 Dec-02 Japan Eco-mod Spot Ardmore Seamaster IMO 3 45,840 Sep-04 Japan Eco-mod Spot Ardmore Seamariner Product 45,726 Oct-06 Japan Eco-mod Spot Ardmore Sealeader Product 47,463 Aug-08 Japan Eco-mod Spot Ardmore Sealifter Product 47,472 Jul-08 Japan Eco-mod Spot Ardmore Dauntless IMO 2 37,764 Feb-15 Korea Eco-design Pool Ardmore Defender IMO 2 37,791 Feb-15 Korea Eco-design Pool Ardmore Centurion IMO 2 29,006 Nov-05 Korea Eco-mod Spot Ardmore Cherokee IMO 2 25,215 Jan-15 Japan Eco-design Pool Ardmore Cheyenne IMO 2 25,217 Mar-15 Japan Eco-design Time Charter Ardmore Chinook IMO 2 25,217 Jul-15 Japan Eco-design Time Charter Ardmore Chippewa IMO 2 25,217 Nov-15 Japan Eco-design Time Charter Ardmore Calypso(1) IMO 2 17,589 Jan-10 Korea Eco-mod Time Charter Ardmore Capella(1) IMO 2 17,567 Jan-10 Korea Eco-mod Time Charter Total 24 969,953 4.3 (2)

1. Agreed sale of the Ardmore Calypso and Ardmore Capella, expected to deliver to buyer in 2Q16 2. Average age of fleet as at Feb 29th, 2016

500 1,000 1,500 2,000 2,500 3,000 3,500

Million Tonnes

Crude Seaborne Trade Product Seaborne Trade

7

MRs in Perspective

Crude Tankers

(Uncoated)

Product / Chemical Tankers

(Coated: 25,000 Dwt to 120,000 Dwt )

Short Range / Stainless / Specialized

World Tanker Fleet(1)

5,907 Vessels

UL / VLCC SUEZ AFRA PAN LR2 LR1 MR SR Stainless Spec 635 494 629 84 262 329 1,892 896 577 109

Growing Share of World Tanker Fleet

Products Share of Oil Seaborne Trade Increasing(2)

75% 25% 64% 36%

• MR tankers comprise ~32% of the world tanker

fleet by number of ships(1)

• Seaborne oil transport is gradually shifting away

from crude and toward refined products

• This is the main growth driver for MRs

1. Source: Drewry as at February, 2015 2. Source: Clarksons Shipping Intelligence Network Time series

8

MRs the “Yellow Cabs” of the World Tanker Fleet

MRs Trade Everywhere And Are The Ship Of Choice For Oil Traders Due To Their Versatility

MR VLCC LR1 LR2

9

Consistent and Focused Strategy

• Acquire vessels at cyclical lows: low cash

breakeven and maximum ship value appreciation

• Operate and maintain vessels efficiently
• Low overhead at approx. $1,200 per ship /

day (1)

Cost Efficiency

• Time charter and spot employment - mix

adjusted to maximize TCE

• 1Q16: Spot 71% v Time Charter 29%
• Maintain close dialogue with charterers at

all times for time-charter opportunities

• Maintain a high-quality, fuel efficient fleet
• Exploit the product and chemical overlap
• Close operational collaboration with

charterers: service excellence

• Optimise voyage performance: maximise

TCE

Highly Effective Chartering Strategy

2

Superior Operational And Financial Performance

3

Consistent Focus on MR Product and Chemical Tankers

1

Value Added Service = Max Earnings

4

1. Based on full fleet of 24 ships

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Strong Management Team with Proven Track Record

Name Experience (Years) Past Positions Tony Gurnee

33 CEO

Mark Cameron

30 COO

Paul Tivnan

14 CFO

Gernot Ruppelt

14 Director of Chartering and Business Development

Greg Chad

38 Director of Human Resources

• CEO of Industrial Shipping Enterprises, COO of MTM Group and CFO of Teekay Shipping

Corporation

• Shipping financier with Citicorp and U.S. Naval Officer
• MBA, CFA, Fellow of the Institute of Chartered Shipbrokers
• VP of Strategy and Planning at Teekay Marine Services
• Fleet Manager at AP Møller-Maersk
• Chief Engineer at Safmarine
• Formerly at Ernst & Young, Financial Services Advisory
• Associate of the Institute of Chartered Accountants of Ireland and the Irish Taxation Institute
• Member of the Institute of Chartered Shipbrokers
• Tanker Broker at Poten & Partners
• Chartering Manager Maersk Broker / AP Møller-Maersk (Copenhagen, Singapore, Germany)
• Graduate of Hamburg Shipping School and Member of the Institute of Chartered Shipbrokers
• VP Corporate Services at Teekay Shipping Corporation
• Held human resource management positions at BC Telephone and Canadian Airlines
• Graduate of the University of British Columbia and holds MBA in Human Resource Management

from Seattle City University

Decades Of Experience With Industry Leading Companies

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Demand: Long Term Secular Drivers

• Longer voyage distances (tonne miles) as a result of

refinery expansions in US, Middle East and Asia plus reduction in refinery capacity in Europe

• Increased demand for oil products driven by low oil

price

• New large scale export refineries in Middle East(1)
• US Gulf increasing exports of refined products
• Sulphur and other regulations increasing voyage

duration and demand for ship days

• Product tanker tonne mile demand grew by ~4-5%

CAGR between 2005 and 2015(3)

Note: Ongoing trend of refineries expanding closer to the oil well as refineries in areas of consumption close down.

• 1. Seaborne trade of refined products is ~22 million barrels / day. New / expanded refineries in Yanbu (Saudi Arabia) and Ruwais (UAE) for export market is equal to ~820,000 barrels / day commenced in 1Q15. Significant additional refinery

expansion in 2015 -2018

• 2. Source: IEA Medium Term Market Report 2015, World Refinery Capacity Additions 2015 -2020 (thousand barrels per day)
• 3. Source Drewry as at January 2016

Global Refinery Developments (2015-2020) (2) Drivers in Product Tanker Market

95.5 96.0 96.5 97.0 97.5 98.0 98.5 99.0 99.5 100.0 100.5 101.0 2015 2016e 2017e 2018e

mb/d

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Demand: Product Tanker Outlook

Estimate of 2016 Seaborne Imports / Exports(1)

1. Source: Clarkson's Shipping Intelligence Network, forecast for 2016 according to Clarkson’s SIN data 2. Source: IEA Medium Term Market Report 2016 and management estimates

Global Refinery Net Capacity Growth(2)

+0.5mbd +1.3mbd +1.3mbd

Import Export Net Imports as % Total Trade Exports as % Total Trade Middle East 1.2 2.7 1.5 5.3% 11.8% North America 1.8 3.3 1.5 7.9% 14.5% China 0.5 0.6 0.1 2.2% 2.6% Asia (ex China) 8.1 5.7

• 2.4

35.5% 25.0% Europe 7.1 5.7

• 1.4

31.1% 25.0% Latin America 1.9 0.6

• 1.3

8.3% 2.6% Africa 1.3 0.4

• 0.9

5.7% 1.8% FSU n/a 3.1 n/a n/a 13.6% Other 0.9 0.7

• 0.2

3.9% 3.1% Total Trade MMbpd 22.8 22.8 100% 100%

• Seaborne product market is 22.8 million bpd and refinery

developments set to increase further

• ~7.7 million bpd of additional refinery capacity in next 5

years

• ~1.1 million bpd of new refining capacity expected to

come on stream in 2016 resulting in net capacity growth of ~0.5 million bpd(2)

• United States +400kbd (primarily PADD3)
• China +327kbd / Middle East +306kbd
• Europe -258kbd / Japan -318kbd
• Increasing diesel exports from China driving trade

Comments

Supply: Orderbook at Historical Lows

1. Source: Clarkson's Shipping Intelligence Network, forecast based on management estimates. 2015 estimate assumes Sungdong SB Korea is closed 2. Source: Clarksons Shipping Intelligence Network 3. Management estimates based on analysis of MR Product orderbook, vessel deliveries and yard capacity 4. Based on management estimates of full year deliveries as at February, 2016

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Shipyard Capacity(1)

4 4 2 3 6 7 5 4 4 2 2 4 6 2 2 5 10 15 20 2007 2008 2014 2015e

Number of Yards Number of Yards to Deliver at Least One MR Tanker

China Korea Japan Other

• 42%

Product Tanker Orderbook and Fleet Development(2)

0% 10% 20% 30% 40% 50% 60% 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

OB as % Fleet Million DWT

• Orderbook currently at ~9.5% down from 48% in 2007
• Lowest point in 15 years
• Shipyard capacity significantly reduced: down ~42%

since 2008:

• 19 yards in 2008 versus 11 yards in 2015
• Estimated MR deliveries of(4):
• FY 2016: 99
• FY 2017: 70
• FY 2018: 18

Comments(3)

Product Tanker Demand & Supply

• Fleet(1):

1,892 ships

• Demand growth:

108 ships / year ++

• Expected deliveries(2):

99 ships / year

• Expected scrapping(3):

20 ships / year

• Net fleet growth:

79 ships / year

1. Source: Drewry as at February, 2015 2. Management estimates for FY 2016 based on analysis of MR Product orderbook, vessel deliveries and yard capacity 3. Internal Estimate based on average dwt of ships scrapped over the last three years adjusted for average vessel size in total fleet. 39 ships scrapped in 2013 ,30 ships in 2014 and 20 ships in 2015

Demand Growth 5%+ vs. Supply Growth ~4%

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Product Tanker Market

Average MR Triangulation Rates(1)

• Volume of seaborne refined products has increased by

4-5% CAGR for past 15 years

• Low oil price and price volatility increasing trading

activity

• Charter rates have strengthened significantly with

increasing cargo volumes and trading

• Strong charter rates in 2015 of $21,548 / day - increase
• f ~30% y-o-y
• Market remains firm in 1Q16 following some refinery

maintenance in early February

1. Source: HRP - Trailing 12 month average of TC11/TC4 and TC2/TC14 triangulation rates as at February 29th, 2016 2. Source: Seaborne volume of Oil Products sourced from Clarkson's Shipping Intelligence Network, forecast for 2016 according to Clarkson’s SIN data

$10,000 $12,000 $14,000 $16,000 $18,000 $20,000 $22,000 $24,000 $26,000 Trailing 12 Mth. Average Rates

Seaborne Volume of Oil Products Traded(2)

12.2 22.8 0.0 5.0 10.0 15.0 20.0 25.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016e

MMbpd CAGR: >4%

Comments

15 20 25 30 35 40 45 50 55 60 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16

Vessel Price ($mln)

Newbuild (47 - 51K Dwt) Secondhand (5yr Old 47k Dwt) 10,000 15,000 20,000 25,000 30,000 35,000 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16

US$ per Day

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Rates and Asset Values Still at Low Levels

Historical 1YR MR Charter Rates Historical MR Asset Values

Charter Rates And Asset Values Remain Well Below Historical Averages And Ardmore’s Fleet Has Been Assembled At An Attractive Point In The Cycle

Source: Clarkson’s Shipping Intelligence Network, Internal data, publicly disclosed market information.

Rates remain more than ~40% below the last cycle peak Ardmore’s Investment Period

4,280 7,071 8,221

• 1,000

2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 FY14 1Q15 2Q15 3Q15 4Q15 FY15 FY16 EST

Revenue Days

17 Executing On Rapid And Profitable Growth Through Fleet Expansion Program

Strong Financial Performance and Significant Growth

EBITDA Growth ($Mln)(2) Revenue Growth ($Mln)

1. Revenue Days based on managements estimates. FY16 estimates include the impact of the sale of the Ardmore Calypso and Ardmore Capella 2. EBITDA is a non-GAAP measure that is defined as earnings before interest, taxes, depreciation and amortization. Management uses this measure in evaluating Ardmore’s operating performance.

Revenue Days Growth From New Deliveries(1)

+65% (Y-o-Y) +16% (Y-o-Y) $25.2 $35.9 $67.3 $157.9 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 FY 2012 FY 2013 FY 2014 FY 2015 $5.1 $9.5 $22.7 $70.6 $0 $10 $20 $30 $40 $50 $60 $70 $80 FY 2012 FY 2013 FY 2014 FY 2015

$423.6 $699.4 $1.3 $9.4 $9.4 $9.4 Vessel Assets @ 4Q15 Gross Debt @ 4Q15 (1) 1Q 2016 2Q 2016 3Q 2016 4Q 2016 Debt Repayments

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Conservative Capital Structure

• Book value of vessel assets ~$700 mln and gross debt of ~$424 mln as at Dec 31, 2015(1)
• Low corporate leverage: ~55% as at Dec 31, 2015, with significant balance sheet cash
• Completed the refinancing of $408 mln of debt since the start of 2016, reducing our interest expense and improving surplus cashflow

Debt Profile

(2)

1. Gross Debt excludes impact of netting of deferred finance fees as required under US GAAP ($423.6 mln - $8.6 mln = $415 mln) 2. Proforma debt repayment profile based on 1Q16 debt refinancing

$0.72 $1.14 $1.50

Base Rates Rates FY2015 Upside Rates - 3Q15

$1.20 $1.89 $2.50 Vessel Type TCE per day TCE per day TCE per day MR Product (50k) $18,500 $21,500 $24,250 MR Chem (25-37k) $16,500 $17,500 $18,000

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Every $1,000 / day increase in rates equals 34 cents per share in EPS and Cashflow & dividend increase of $0.20 / share(2) Earnings Per Share(1)

1. Management estimates based on a full fleet of 24 vessels operating in the spot market for 363 revenue days / ship 2. Realized across a full fleet of 24 ships. Calculation based on: ($1,000 day x 363 revenue days x 24 ships) / 26.1mln shares = $0.34 per share. $0.34 x 60% = Dividend of $0.20 per share

Efficient Operation Resulting in Significant Earnings Power

Dividend Per Share(1)

Earnings Power

$6 $8 $10 $12 $14 $16 $18 $20 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 Nov-15 Dec-15 Jan-16 Feb-16

Share Price Average Spot MR Tanker Rates

Average Spot MR Tanker Rates vs ASC Share Price Performance (1)

Average MR Spot Rates Share Price

20

Attractive Share Price – Disconnected from Ship Rates

1. Source: Bloomberg, HRP. Period November 02, 2015 to February 29, 2016 2. Source: Bloomberg. Period November 02, 2015 to February 29, 2016 3. Source: HRP – Comparison of the average of the combined TC11 / TC 4 and TC 2/ TC 14 triangulation rates as at November 02, 2015 to the same rate as at February 29, 2016

• Volatility in the stock market has created a disconnect between share price and business prospects
• ASC share price now trading at a considerable discount to the inherent value of the company. ASC price down

~46% since November 2015(2), while average MR spot rates have increased ~21% over the same period(3)

Disconnect Between Share Price and Rates

ASC Share Price

• 46% Vs MR Spot Rates

Nov - Feb

21

Why Invest In Ardmore?

• Near-term outlook remains positive, anticipating a solid charter market

in 2016

• Strong secular demand growth continues as refinery expansions and

complexity of trading activity drive tonne mile demand

• MR orderbook now at lowest point in 15 years and set to decline by

year-end to around 5% without additional ordering

• Ardmore is well positioned to take advantage of continued strong

rates:

• Every $1,000 increase in charter rates across the delivered fleet

equates to $0.34 in EPS and $0.20 in dividend(1)

• Attractive dividend yield driven by world class operations:
• Dividend policy to pay out to pay out 60% of net income quarterly
• Fully funded with a conservative capital structure

1. Calculations based on a full year at our existing cost structure and assumes (a) fleet of 24 vessels, (b) utilization of 99.45% and (c) 26.1 mln shares. Assumes no change in tax rate, cost of debt or share count

.

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Thank You

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Crude Oil NGL Plant

Appendix: Origin of Product and Chemical Cargos

Gas Refinery Ethylene Cracker Naphtha Cracker Reformate Ethane Propane Butane Naphtha Pygas Ethylene Propylene Butylene

• Ethylene Dichloride
• Ethylene Glycol
• Linear Alcohols
• Vinyl Acetate
• Styrene
• Misc chemicals

Manufacturing

• Polystyrene
• Fibres
• Resin
• Latex
• Polyester
• Nylon
• Adhesives
• Solvents
• Detergent
• Anti-Freeze
• Flooring
• Textiles

Fuel Blending

• Oxygenates
• Anti-knock agents

Agri-Business

• Fertilizers

Commercial Use M/A Production Plant

• Methanol
• MTBE
• UAN

Liquid Cargos

• Benzene
• Toulene
• Xylenes
• Styrene
• Cyclohexane
• Misc chemicals

Methane

• Gasoline
• Jet Fuel and Diesel
• Fuel Oil

Ardmore’s Fleet Capability Ethylene

Natgas, NGL’s and Naphtha are the key feedstocks for chemicals shipped by sea

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Appendix: Product and Chemical Overlap

Gasoline Diesel Kerosene Jet Fuel Naphtha Clean Petroleum Products (CPP) Chemicals*

* Certain chemicals such as Caustic Soda can be carried on IMO3 ships. However the vast majority of inorganic chemicals must be carried on IMO2 ships and acid based cargos are only suitable for stainless steel ships.

IMO 3 Tankers

• Cargo
• Tank Coating:
• Tank Size:
• Inerting:
• Crewing:

IMO 2 Tankers

• Cargo:
• Tank Coating:
• Tank Size:
• Inerting:
• Crewing:

IMO 2 (Coated) IMO 3

CPP + Vegoils Epoxy >3,000 m3 Required (standard IGS not suitable for chemicals) Standard tanker competency CPP + Vegoils + Biofuels + Chemicals Phenolic Epoxy / Stainless Steel / Marine Line <3,000 m3 Not required for chemicals but growing preference for Nitrogen Chemical tanker competency

Organic Inorganic Vegoils Biofuels Ethanol Other Cargos

Coated IMO2 Ships Are Essentially More Sophisticated Product Tankers