ARDMORE SHIPPING CORPORATION Third Quarter 2014 Earnings - - PowerPoint PPT Presentation

ARDMORE SHIPPING CORPORATION

Third Quarter 2014 Earnings Presentation November 4, 2014

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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, 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.

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Agenda for Earnings Call

• 3Q14 Highlights
• Chartering Outlook
• Newbuilding Program
• Product and Chemical Markets
• Financial Results
• Share Repurchase Plan
• Summary
• Appendix

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Highlights

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Performance and Recent Market Activity

1. Source: ICAP and Clarksons. TC2 / TC 14 and TC11 / TC 4 triangulation rates as of November 3, 2014 2. Weighted average TCE as of November 3, 2014

• Reporting a net profit of $117,000, our second consecutive

profitable quarter, achieved in an otherwise challenging charter market environment

• Strong chartering performance with Eco-design MRs earning

$15,237 / day and Eco-mod MR’s earning $13,919 / day at lower end of escalating rates

• ASC maintaining its focus on efficient operations and low
• verhead costs as means to further build shareholder value
• MR charter market has improved significantly going into the

fourth quarter, with TC2-14 Atlantic triangulation estimated $20,500, and TC4-11 Pacific triangulation estimated $17,900 (1)

• Reflecting this improvement, Ardmore’s three spot-trading MR’s

are earning approximately $18,500(2) on voyages in progress

• Winter market outlook now very positive with broad strength

across all regions, ASC well positioned with spot vessels, TC renewals and five newbuildings delivering in first quarter 2015

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Fleet and Financial Developments

Improving Financial Performance (1) Modern, Fuel- efficient Fleet

1. EBITDA, adjusted EBITDA and adjusted net profit are non-GAAP measures. Reconciliations of such measures are included in Appendix II of this presentation

• Took delivery of two MR tankers (Sealifter and Sealeader) in July and August
• Three MR tankers are now trading spot as part of our overall portfolio strategy
• Completed drydock for Seamaster in July 2014
• Reported EBITDA

(1) for 3Q 2014 of $5.8 million and net profit of $117,000

• Adjusting for non-cash items, adjusted EBITDA(1) and adjusted net profit(1) amounted to $6.1 million

and $465,000 million, respectively

• Declared a cash dividend of $0.10 per share for 3Q 2014

Strong Balance Sheet

• Initiating a $20 million, three-year, share repurchase plan as a means to capitalise on
• pportunities arising during stock market dislocations
• Completed a $13.5 million senior debt facility with NIBC to finance Ardmore Seamariner
• ASC has now fully financed its fleet, including documented facilities for all newbuildings

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Chartering Outlook

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Positive Outlook for Fourth Quarter

1. Revenue days for 4Q 2014 is based on an assumed 99.5% utilization 2. As at October 31, 2014. One of the time charters contains a profit-sharing component. 3. Rate excludes income from profit share

Estimated Time Charter and Spot Revenue Days: 4Q 2014 Estimated Days 4Q 2014

366 366 92 92 183 136 MR Eco-design MR Eco-mod Chemical

TC Days Spot Days 4Q Est TCE: $13,549 4Q Est TCE: $15,837 (3) 4Q Est TCE: $14,383

Fleet Employment Profile(2)

Vessel Employment Ardmore Seavaliant Time Charter Ardmore Seaventure Time Charter Ardmore Seavantage Time Charter Ardmore Seavanguard Time Charter Ardmore Endeavour Spot Ardmore Seafarer Time Charter Ardmore Seatrader Time Charter Ardmore Seamaster Time Charter Ardmore Seamariner Time Charter Ardmore Sealeader Spot Ardmore Sealifter Spot Ardmore Centurion Time Charter Ardmore Calypso Pool Ardmore Capella Pool

4Q 2014 E Operating Days 1,288 Drydock / Positioning Days 48 Revenue Days (1) 1,234 Revenue Days Breakdown: Time Charter Days 824 Spot / Pool Days 411 Time Charter Coverage in 4Q14 67%

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Newbuilding Program

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Newbuilding Program On Track

Scheduled / Contracted Fleet Development

(1)

• Construction progressing well, with all vessels expected

to deliver within 2015

• Five Eco-design vessels scheduled to deliver in 1Q15:

− 25,000 Dwt x 2 (Fukuoka, Japan) − 37,000 Dwt x 2 (Hyundai Mipo, South Korea) − 50,000 Dwt x 1 (SPP, South Korea)

1. Assumes on time deliveries of all vessels currently under construction

Construction Progress Newbuilding Program

14 19 20 22 24 10 5 4 2 4Q 2014 1Q 2015 2Q 2015 3Q 2015 4Q 2015 In Operation Predelivery

FKA HULL N-2067 SPP HULL S-1172 FKA HULL N-2065 SPP HULL S-1171 SPP HULL S-1163 FKA HULL N-2063 SPP HULL S-1162 HMD HULL H-2481 HMD HULL H-2480 FKA HULL N-2062 Completed To Complete Aug-13 Sept-14 Jan-15 Mar-15 Jul-15 Oct-15

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Product and Chemical Markets

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Commentary

Rapidly Improving Product Tanker Market

MR Triangulation YTD 2014

Product Tanker Orderbook and Fleet Development

Fleet million Dwt, start year Orderbook (% of Fleet)

Source: Drewry, Clarksons Shipping Intelligence Network, ICAP, internal market data

• 1. Trinagulations as of November 3, 2014. TC2: Rotterdam to New York. TC 14: Houston to Amsterdam. TC11: Yosu to Singapore. TC 4: Singapore to Japan.
• MR spot market has improved significantly(1)

− West: TC 2 / TC 14 $20,504 / day − East: TC 11 / TC 4 $17,889 / day

• Market in East has been relatively stable throughout the year
• One-year time charter rates improving with spot rates

− MR Eco-designs: ~$16,250 / day − MR Eco-mods: ~$14,500 / day

• Outlook remains positive

− US: refinery maintenance expected to end in early Nov. ’14 − Yanbu: on schedule to commence exports in November − Ruwais: expect full commissioning by end of year

• MR fleet growth expected to be 3.5% - 4% in 2014

− Orderbook declining: ~291 vessels or ~16.4% of fleet based on Dwt − Deliveries stretch to 2017 / 2018 − 89 MRs delivered in YTD 2014 − 22 vessels reported scrapped in same period

• Sale and Purchase

− Yard prices for newbuildings firm at $36.5 mln for delivery end 2016 − Equates to delivered cost of $38 million − Valuations for re-sales specific to seller

0% 10% 20% 30% 40% 50% 60% 70% 20 40 60 80 100 120 140 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 $2,500 $7,500 $12,500 $17,500 $22,500 $27,500

TC 11/4 TC 2/14

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Commentary

Chemical Tanker Market Poised for Improvement

Chemical Tanker Cargoes(2)

• Chemical rates have improved y-o-y:

− YTD Sept 30, 2014; $11,400 v $10,980 in prior year

• Rates tracked product rates in 3Q14 and improvements expected

in 4Q14 with higher winter COA freight rates − Vessels continue to trade accross CPP / Vegoil / Chemicals

• ASC’s Eco-design newbuildings commence delivery in Jan 2015

and are attracting significant interest from charterers.

• Outlook remains positive

− Middle East and US petrochemical expansion continuing(1) − Expected increases in tonne mile demand growth rate as global economy accelerates and voyage distances lengthen

• Chemical tanker supply

− Orderbook approx 11% of fleet based on Dwt(3) − Delivering 2014 to 2018 − Delays in non-core yards evident

• Sale and Purchase

− Newbuilding prices holding firm − Second-hand activity limited Chemical Tanker Orderbook and Fleet Development(3)

Fleet million Dwt, start year Orderbook (% of Fleet)

Sources: Drewry, Clarksons Shipping Intelligence Network, Clarksons World Fleet Register, Bloomberg, internal market data 1. Petrochemical exports from US Gulf expected to increase 45% by 2018. Source: American Chemistry Council 2. Based on internal chemical tanker voyage data from Jun-14 to Oct-14 3. Orderbook for coated IMO2 and stainless steel ships above 10,000 Dwt only

0% 10% 20% 30% 40% 50% 60% 70% 5 10 15 20 25 30 35 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

10,000 20,000 30,000 40,000 50,000 60,000 70,000

Mectric Tons

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Finance

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Bank Financing Complete

• Bank finance in place for all vessels; strong banking

relationships resulting in progressively lower margins

• Debt at Sept. 30, 2014: $219 million
• $211 million of committed bank financing for newbuildings
• No near-term balloons or final maturities

1. Assumes debt drawn in line with scheduled deliveries of all vessels currently under construction

Commentary

Debt Profile

(1)

$430.0 $219.0 $211.0 $4.9 $4.9 $6.7 $7.5 $8.2 $34.0 $34.1 $29.6 $26.9 $55.2 $10.1 Debt @ 3Q 2014 Committed Debt Total Debt 4Q 2014 1Q 2015 2Q 2015 3Q 2015 4Q 2015 2016 2017 2018 2019 Repayments Balloon Repayments Debt Repayments

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Improving Financial Performance

Income Statement & Other Operating Data

1. EBITDA, adjusted EBITDA, adjusted net earnings/(loss) and adjusted net profit/(loss) per share are non-GAAP measures. Reconciliations of such measures are included in Appendix II of this presentation 2. 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

INCOME STATEMENT DATA Three months ended Nine months ended US$ millions, unless otherwise stated

• Sept. 30, 2014
• Sept. 30, 2013
• Sept. 30, 2014
• Sept. 30, 2013

Results Revenue 18.86 10.62 45.08 26.24 EBITDA(1) 5.78 2.82 14.74 7.99 Net profit/(loss) 0.12 (0.92) (0.20) (2.15) Net profit/(loss) per share ($/share) 0.004 (0.063) (0.008) (0.209) Adjusted Results Adjusted EBITDA(1) 6.12 3.41 15.78 8.93 Adjusted net profit/(loss)(1) 0.46 (0.34) 0.83 (1.03) Adjusted net profit/(loss) per share ($/share)(1) 0.018 (0.023) 0.035 (0.100) OTHER OPERATING DATA Average Number of Vessels 13.2 8.0 11.4 7.2 Fleet time charter equivalent per day ($/day)(2) 13,646 13,199 14,006 13,021 Fleet operating costs per day ($/day)(3) 5,968 5,970 6,071 6,038 Technical management fees per day ($/day)(4) 370 380 362 386 Upgrades / enhancements expensed (Total US$) 224,238 129,782 395,114 396,621

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Time Charter Equivalent ($ / day)

(1)

Substantial Operating Leverage and Rates Improving Y-o-Y

Charter Rates Building Year-on-Year

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. 2. Calculations based on existing cost structure and assume (a) a fully-delivered 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. 3. TCE including vegetable oil trip charter rate is $15,838 per day

For every $1,000/day increase in rates(2): Operating Income ($mln) EPS Existing 24 Ship Fleet $8.76 $0.34 $9,108 $10,483 $11,398 2012 2013 PE 3Q14 Chemical Tankers "Eco-Mod" $13,294 $13,732 $14,317 2012 2013 PE 3Q14 MR Tankers "Eco-Mod" $15,527 2012 2013 PE 3Q14 MR Tankers "Eco-Design" Trip Charter $15,089(3)

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Strong Balance Sheet

Selected Balance Sheet Data

Low Financial Leverage and every $1M increase in vessel values = $0.92 in NAV / share

(1)

1. 24 ships x $1 million = $24 million / 26.1 million shares = $0.92 / share; assumes no change in share count.

BALANCE SHEET DATA As at US$ millions, unless otherwise stated

• Sept. 30, 2014
• Dec. 31, 2013

Cash 66.0 56.9 Receivables, Inventories and Other Assets 19.0 9.1 Vessels, Instalment Payments & Drydock 472.3 292.0 Total Assets 557.3 358.0 Payables and Accruals 9.4 6.4 Debt & Capital Lease Obligations 219.0 119.2 Equity 328.9 232.4 Total Liabilities and Equity 557.3 358.0 Debt / Debt + Equity 39.97% 33.90%

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Share Repurchase Plan

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Share Price Disconnect Presents Opportunity

Baltic Clean Tanker Index vs ASC Share Price Performance (1) Market Activity and Share Repurchase Announcement

• Spot charter market is showing strong prospects for a recovery heading into the winter, with solid underlying fundamentals
• Stock market has experienced volatility and sell-off, creating a disconnect between share price and business prospects
• ASC share price now trading at a considerable discount to the inherent value of the company
• Affords an opportunity for Ardmore to take advantage of irrational share price activity and build value for shareholders by

investing in our business at compelling levels

• Announcing a plan for a repurchase of up to $20 million over a three-year period

Share price and market disconnect

1. Source: Bloomberg. Period January 2, 2014 to October 28, 2014.

$350.00 $400.00 $450.00 $500.00 $550.00 $600.00 $650.00 $700.00 $750.00 $8.00 $9.00 $10.00 $11.00 $12.00 $13.00 $14.00 $15.00 $16.00 Jan-14 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Baltic Clean Tanker Index Share Price

Share Price Baltic Clean Tanker Index

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Summary

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Summary

Thank You

• Strong financial results in third quarter in spite of weak charter market, resulting from superior

chartering performance and emphasis on efficient operations and low corporate overhead

• MR spot market improving significantly moving into winter months, Ardmore well positioned to

benefit through combination of spot vessels, well-timed TC renewals, and newbuilding employment strategy

• Bank debt now arranged for whole fleet, including newbuildings; conservative balance sheet

provides financial flexibility and capacity for continued growth as a means to build value

• Announcing a $20 million share repurchase plan to capitalise on any continuing or future stock

market dislocations

• Declared our quarterly dividend of $0.10 per share on October 15, 2014

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Appendix

I. Fleet List II. Non-GAAP Measures III. MR Product Tanker Activity and Trade Pattern IV. Origin of Product and Chemical Cargos V. Product and Chemicals Overlap

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• I. Fleet List

1. Average age at December 31, 2015, after all vessels are delivered

ECO PRODUCT TANKERS ECO CHEMICAL TANKERS

NAME SIZE (DWT) DELIVERED BUILT IN OPERATION ARDMORE SEAVANGUARD 49,998 2014 Korea ARDMORE SEAVANTAGE 49,997 2014 Korea ARDMORE SEAVALIANT 49,998 2013 Korea ARDMORE SEAVENTURE 49,998 2013 Korea ARDMORE ENDEAVOUR 49,997 2013 Korea ARDMORE SEAFARER 45,744 2004 Japan ARDMORE SEATRADER 47,141 2002 Japan ARDMORE SEAMASTER 45,840 2004 Japan ARDMORE SEAMARINER 45,726 2006 Japan ARDMORE SEALEADER 47,463 2008 Japan ARDMORE SEALIFTER 47,472 2008 Japan ON ORDER SPP Hull S-1162 50,300 1Q15 Korea SPP Hull S-1163 50,300 2Q15 Korea SPP Hull S-1171 50,300 3Q15 Korea SPP Hull S-1172 50,300 4Q15 Korea TOTAL 15 Vessels 5 Years Average Age(1) NAME SIZE (DWT) DELIVERED BUILT IN OPERATION ARDMORE CENTURION 29,006 2005 Korea ARDMORE CALYPSO 17,589 2010 Korea ARDMORE CAPELLA 17,567 2010 Korea ON ORDER HMD Hull H-2480 37,000 1Q15 Korea HMD Hull H-2481 37,000 1Q15 Korea FKA Hull N-2062 25,000 1Q15 Japan FKA Hull N-2063 25,000 1Q15 Japan FKA Hull N-2065 25,000 3Q15 Japan FKA Hull N-2067 25,000 4Q15 Japan TOTAL 9 Vessels 3 Years Average Age(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

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• II. Non-GAAP Measures

Non-GAAP Measures

(1) 1. EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA before share-based compensation and initial public offering costs and certain other items that Ardmore believes are not representative of its operating performance. These non-GAAP measures are presented in this press release as the Company believes that they provide investors with a means of evaluating and understanding how Ardmore’s management evaluates operating performance. These non-GAAP measures should not be considered in isolation from, as substitutes for, or superior to financial measures prepared in accordance with U.S.

• GAAP. In addition, these non-GAAP measure do not have standardized meanings, and are therefore unlikely to be comparable to similar measures presented by other companies.

NON-GAAP MEASURES Three months ended Nine months ended expressed in US$, unless otherwise stated

• Sept. 30, 2014
• Sept. 30, 2013
• Sept. 30, 2014
• Sept. 30, 2013

EBITDA & Adjusted EBITDA Net profit/(loss) 117,298 (920,027) (201,409) (2,149,919) Interest income (3,077) (2,320) (13,377) (4,511) Interest expense and finance costs 1,056,730 1,060,320 2,946,752 3,003,269 Income tax 11,054 9,560 37,108 23,942 Depreciation 4,081,901 2,335,138 10,505,031 6,064,064 Amortization of deferred dry dock expenditure 511,249 340,872 1,467,087 1,055,294 EBITDA 5,775,155 2,823,543 14,741,192 7,992,139 IPO related fees and expenses

• 368,875
• 721,375

Share based compensation (non-cash) 347,584 213,883 1,035,538 219,508 Adjusted EBITDA 6,122,739 3,406,301 15,776,730 8,933,022 Adjusted net loss Net profit/(loss) 117,298 (920,027) (201,409) (2,149,919) IPO related fees and expenses

• 368,875
• 721,375

Deferred finance fee write off (non-cash)

• 179,816

Share based compensation (non-cash) 347,584 213,883 1,035,538 219,508 Adjusted net profit/(loss) 464,882 (337,269) 834,129 (1,029,220) Adjusted earnings/(loss) per share, basic and diluted 0.018 (0.023) 0.035 (0.100) Weighted average number of shares, basic and diluted 26,100,000 14,680,435 24,042,308 10,284,189

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• III. MR Product Tanker Activity and Trade Pattern

MRs trade everywhere and are the ship of choice for oil traders due to their versatility

LR2

Source: Lloyds List Intelligence AIS Data Screenshot of world fleet of each vessel type on October 31, 2014.

MR VLCC LR1

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

Crude Oil NGL Plant

• IV. 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

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Coated IMO2 Ships are essentially more sophisticated Product Tankers

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.

• V. Product and Chemicals Overlap

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