Third Quarter 2018 Earnings Presentation Disclaimer 2 This - - PowerPoint PPT Presentation

ARDMORE SHIPPING CORPORATION Third 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, are among these forward-looking statements including, without limitation, statements about: future operating or financial results; global and regional economic conditions and trends; the Company’s business strategy and expected operating expenses and

• perating leverage, including expected increases in EPS for given tanker rate increases; competition in the tanker

industry; shipping market trends and market fundamentals, including expected tanker demand and scrapping levels; the effect on tanker demand of the IMO 2020 regulations, and the timing of such effect; the Company’s financial condition, liquidity and debt amortization; and expected 2018 revenue days. Although the Company believes that its expectations stated in this presentation are based on reasonable assumptions, actual results may differ materially 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. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based.

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Earnings Release: Third Quarter 2018

▪ Performance and Recent Market Activity ▪ Market Overview ▪ 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 $3.9 million and net loss of $12.2 million, or $0.37 per share in the third quarter, reflecting continued weakness in product tanker charter rates ▪ Our MR product tankers earned $10,314 per day in the third quarter and $11,450 per day year-to-date. MR spot rates adversely impacted by:

• Lower cargo volumes in Atlantic Basin y-o-y; one-off events in 2Q18

continued into early 3Q18

• Some encroachment from larger tankers, which looks to be easing

▪ MR rates have recovered from summer lows; now appear to be on an upward trajectory into the winter months ▪ Fleet is performing well; operating expenses and overhead below budget year-to-date ▪ Our cash at quarter end was $53 million(1) on a pro forma basis; resulting from the refinancing of four vessels on favourable terms in October ▪ Looking ahead, supply / demand fundamentals remain very positive, while at the same time, IMO 2020 expected to create upside for entire tanker market, and product tankers in particular, from mid-2019

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1. Pro forma cash is based on closing balance 3Q18 of $33.3mln plus net cash release of $19.7mln from refinancing of four vessels completed in October 2018

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Fleet Profile

1. Average age as at September 30, 2018

✓ Modern, highly fuel efficient fleet of MRs ✓ Average age of 6.2 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 6.2(1)

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Market Overview

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0% 10% 20% 30% 40% 50% 20 40 60 80 100 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 OB as % Fleet Million DWT Fleet (Million DWT) OB as % of Fleet

MR Tanker Fundamentals

Product Tanker Orderbook and Fleet Development(3)(4)

▪ MR tanker fundamentals are very positive: ▪ Oil consumption continues to grow strongly, matched by refinery capacity additions in trading-oriented locations:

• Global oil consumption expected to increase by 1.4 mbd in 2019(1)
• Refinery capacity additions of 2 mbd in 2019(1); expansions in China

(1.1 mbd) and Middle East (0.4 mbd) to drive increased exports of refined products from Asia

▪ MR orderbook remains at all-time lows:

• Forecasting 50 MRs to deliver for full year 2018 (43 ytd)(3)(4)
• Scrapping run rate at approx. 40 – 50 MRs per year; 38 scrapped ytd

in 2018(3)

• As a result fleet growth, net of scrapping, expected to be close to

zero in 2018 and 1% in 2019(3)(4)

▪ These strong fundamentals are expected to provide a solid foundation for the MR market as it benefits from more positive oil market dynamics

1. IEA Oil Market Report, October 12th 2018 2. Clarksons Shipping Intelligence, October 2018 3. Clarksons Shipping Intelligence Network, and management’s estimates. Note these numbers include slippage. Management’s estimates based on 50% of 4Q18 scheduled deliveries slipping into 2019 4. Management’s estimates of deliveries for 2018, net of estimated scrapping. Management’s estimates based on 50% of 4Q18 scheduled deliveries slipping into 2019

8 Seaborne Volume of Oil Products Trade(2) 4.7%

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3 8 13 18 23 28 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018E Million Barrels / Day

Product Tanker Tonne-Mile Demand CAGR: 4%(2)

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Recent Tanker Market Activity and Trends

▪ ASC Fleet TCE averaged $10,261 per day in 3Q18:

• MR spot rates averaged $10,314 per day, while chemical tankers

averaged $10,093 per day

• ASC fleet deployment weighted toward Atlantic Basin; a headwind in

3Q18 but now shifting in our favour

▪ Recent market activity:

• Atlantic Basin hit record lows in late summer, driven by one-time

events in key consumer regions (Mexico & Brazil). Globally, MR rates troughed in September

• Atlantic Basin trading activity has returned to more normal levels and

winter market conditions starting to emerge

• Rebound in crude tanker rates is resulting in easing of encroachment
• n product tanker trades; LR2’s expected to migrate to dirty trades

(nine so far)

▪ Market outlook and trends:

• Strong crude tanker rates leading a general tanker market recovery
• Global refinery throughput expected to reach a record high of 84 mbd

in December 2018(3)

• Impact of IMO 2020 expected to be felt beginning in mid-2019

1. Data provided by Howe Robinson 2. Clarksons Shipping Intelligence, as at November 6, 2018 3. IEA Oil Report, October 12, 2018

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$5 $10 $15 $20 $25 $30 $35 $40 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 TCE (Thousand USD / day) Product Tankers Crude Tankers MR Only

Tanker Rates Starting To Improve(1)

$1 $3 $5 $7 $9 $11 $13 $15 $17 $19 $21 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 MR TCE (Thousand USD / day) TC2/TC14 (Atlantic Basin) MR Global Average

Atlantic Basin rates hit lows in Jun & Aug MR rates on a global basis bottomed-out in Sept

MR Rates Recovering(1)(2)

Rebound in crude tanker rates to lead the recovery for product tankers

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IMO 2020: Backdrop

1. High Sulphur Fuel Oil (“HSFO”) has a max. sulphur content of 3.5% . Very Low Sulphur Fuel Oil (“VLSFO”) has a max. sulphur content of 0.5%. Marine Gas Oil (“MGO”) has a max. sulphur content of 0.1% 2. Source: IEA, SEB IMO 2020 Report March 14, 2020, Evercore ISI R&M: IMO 2020 – Back to the Future, April 18th 2018 3. Management estimates

10 VLSFO Limited to Main Bunkering Hubs(3)

▪ Implementation on January 1, 2020 firmly fixed; expected to result in significant increase in demand for compliant fuels:

• HSFO market for bunker fuels currently 3.5 – 4 mbd; approx. 2 mbd

to be replaced by MGO or VLSFO(1)

▪ Market transition expected to commence mid-2019:

• Refineries expected to increase output and shift product slate away

from fuel oil and toward middle distillate as well as find ways to make VLSFO

• Bunker providers need to prepare logistics infrastructure and manage

down inventories of HSFO

• Shipowners either installing scrubbers or preparing to use compliant

fuels

▪ Limited initial availability of VLSFO, combined with slow scrubber installation pace, expected to boost demand for MGO and to create up to two years of market disruption before equilibrium is reached:

• VLSFO initially limited to main bunker ports; MGO expected to be in

high demand worldwide as market transitions

• Scrubber uptake may be restricted by installation complexity and rigid

docking schedules; less than 4% of global fleet (approx. 15% of bunker fuel demand) to be fitted by implementation date(3)

0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 2018 2020 Demand Million Barrels / day

HSFO HSFO MGO / VLSFO MGO

Demand for MGO and VLSFO Set to Increase(2)

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IMO 2020: Impact on Tanker Demand

1. Source: IEA, SEB IMO 2020 Report March 14, 2020, Evercore ISI R&M: IMO 2020 – Back to the Future, April 18th 2018, Wells Fargo LLC 2. McKinsey Energy Insights “MARPOL implications on refining and shipping markets”, December 2017

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0% 20% 40% 60% 80% 100% 2017 2018E 2019E 2020E 2021E 2022E 2023E HSFO MGO VLSFO

▪ Transition of 2 mbd HSFO to compliant fuels expected to have a significant impact on tanker market from mid-2019:

• Higher seaborne volumes of MGO as demand increases by 1 – 1.5

mbd in 2020(1)

• Surplus HSFO will have to be redirected from current consuming

regions for further processing, or alternative use, boosting demand for crude tankers

• Redirection of crude flows as refineries look to respond to new market

conditions, with high complexity refineries sourcing cheaper heavy sour crude and simpler refineries searching for light sweet grades

▪ Demand for product tankers expected to increase:

• Increased consumption and regional imbalances of MGO leading to

tonne-mile demand boost; e.g. Europe expected to substitute 700 kbd

• f HSFO with compliant fuels(2)
• Imbalances create oil price volatility, increasing arbitrage opportunities

and oil trading activity

• US Gulf, Middle East and Asia expected to be significant exporters of

compliant fuels to Europe and other regions, increasing average voyage lengths

0.0 0.5 1.0 1.5 2.0 North Am. Latin Am. Europe Africa FSU Middle East Asia Pacific Demand Million barrels / day High Sulphur Fuels Low Sulphur Fuels

In Europe alone ~700,000 bpd of HSFO expected to be replaced by MGO/VLSFO in 2020 2.5x increase in expected demand for MGO in 2020

Bunker Demand 2018; Expect Significant Imbalances(2) Demand for MGO and VLSFO Set to Spike(1)

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Fleet Update

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Fleet Update

Revenue Days Profile(1) Fleet Update

▪ Revenue days estimated to increase by 1.9% to 9,933 in 2018 ▪ Drydocks:

• 3Q18: completed four drydocks
• 4Q18: 35 drydock days (estimate)

1. Revenue Days based on management’s estimates.

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9,741 2,416 2,505 2,471 2,541 9,933

• 2,000

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

Revenue Days +1.9% (Y-o-Y)

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Financial Review

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Financial Performance

1. EBITDA is a non-GAAP measure. A definition of this measure and a reconciliation of this measure to its nearest GAAP comparable measure are included within Ardmore’s earnings release for the quarter ended September 30, 2018 2. Adjusted net loss is a non-GAAP measure, excluding one-time write off of deferred finance fees of $0.4mln in 2Q18. A definition of this measure and a reconciliation of this measure to its nearest GAAP comparable measure are included within Ardmore’s earnings release for the quarter ended September 30, 2018 3. Time Charter Equivalent (“TCE”) daily rate, represents net revenues divided by revenue days. Revenue days are the total number of calendar days the vessels are in our possession less off-hire days generally associated with drydocking or repairs. For vessels employed on voyage charters, TCE is the net rate after deducting voyage expenses incurred, divided by revenue days, including among other expenses, all commissions and pool administration fees. MR Tankers Spot & Pool TCE is reported on a discharge to discharge basis. Fleet TCE excludes one-off costs related to the transfer of vessels to Ardmore MR Pool 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

15 INCOME STATEMENT DATA Three Months Year to Date US$ millions, unless otherwise stated Sept 30, 2018 Sept 30, 2018 Results EBITDA(1) $3.9 $21.3 Adjusted Net (loss) / income(2) ($12.2) ($25.6) Adjusted Net (loss) / income per share ($/share)(2) ($0.37) ($0.78) General and Administrative expenses Corporate ($3.4) ($10.1) Commercial and Chartering ($1.0) ($2.6) Depreciation & amortization ($9.9) ($28.9) Interest & finance Interest and DFF Amortization ($6.2) ($17.8) Write-off of DFF due to Refinancing $0.0 ($0.4) OTHER OPERATING DATA Average Number of Vessels 28.0 28.0 Fleet time charter equivalent per day ($/day)(2) $10,261 $11,816 Vessel operating expenses (US$ million) $16.3 $49.7 Fleet operating cost per day ($/day) (3) $6,176 $6,426 Eco-Design MR ($/day)(4) $6,279 $6,516 Eco-Mod MR ($/day)(4) $5,903 $6,377 Eco-Design Chemical ($/day)(4) $6,249 $6,268

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Product and Chemical Tanker Charter Rates

1. Time Charter Equivalent (“TCE”) daily rate, represents net revenues divided by revenue days. Revenue days are the total number of calendar days the vessels are in our possession less off-hire days generally associated with drydocking or repairs. For vessels employed on voyage charters, TCE is the net rate after deducting voyage expenses incurred, divided by revenue days, including among other expenses, all commissions and pool administration fees. MR Tankers Spot & Pool TCE is reported on a discharge to discharge basis. Fleet TCE excludes one-off costs related to the transfer of vessels to Ardmore MR Pool 2. Calculations based on existing cost structure and assume (a) fleet of 28 vessels, (b) utilization of 99.45% , (c) 33.1 mln shares as of September 30, 2018. Assumes no change in tax rate, cost of debt or share count

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

• AVG. FLEET

MR ECO-DES MR ECO-MOD

• CHEM. TANKERS

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12,897 13,146 11,806 13,504 11,503 10,600 12,579 12,527 10,261 10,684 9,645 10,093 11,816 11,506 11,333 12,400

• AVG. FLEET TCE

MR ECO-DES MR ECO-MOD CHEMICAL TANKERS 1Q18 2Q18 3Q18 2018 YTD

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Strong Balance Sheet

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 $7.6mln in 3Q18 ($8.9 mln in 4Q17) and netting of $2.9 mln receivable in respect of capital lease in both 3Q18 and 4Q17

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▪ Maintaining a conservative capital structure and strong liquidity position; corporate leverage below 54.9% BALANCE SHEET DATA As at US$ millions, unless otherwise stated September, 2018 December, 2017 Cash 33.3 39.5 Receivables, Inventories & Other Current Assets 47.0 44.4 Vessels, Drydock & Other Non-Current Assets(1) 752.1 758.8 Total Assets 832.4 842.7 Payables and Accruals 26.7 17.6 Debt & Lease Obligations(2) 442.1 444.0 Equity 363.5 381.0 Total Liabilities and Equity 832.4 842.7 Debt / (Debt + Equity) 54.9% 53.8%

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$468.5 $457.4 $752.1 $53.1 $11.1

$20.3

Pro Forma Vessel Assets, Cash & Net Working Capital Pro Forma Gross Debt @ 3Q18 4Q18 Pro Forma Debt @ 4Q18 Gross Debt (excl. Op Leases) Vessel Assets Pro Forma Cash October 2018 Debt Repayments Working Capital 18

Strong Liquidity Position: Pro Forma $53 mln Cash Balance

1. Gross debt balance net of sellers’ credit $2.9mln 2. Gross debt excludes netting of deferred financed fees of $7.6mln and operating lease of $2.1mln in 3Q18 3. Pro Forma Debt includes sale and leaseback of four Ardmore vessels in October 2018

+37% YoY

▪ Completed refinancing of four vessels under finance leases in October, resulting in aggregate net cash proceeds of $19.7 million

• Sale and leaseback of the Ardmore Dauntless and Ardmore Defender
• Sale and leaseback of the Ardmore Encounter and Ardmore Explorer

▪ Maintaining a strong liquidity position; pro forma cash of $53 million (inclusive of October finance leases) with additional $20.3 million in net working capital ▪ All current debt (including capital leases) are amortizing at approximately $44 million per year

Pro Forma Debt Repayment Profile ($ mln)(1)(2)(3)

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Company Review and Summary

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Summary

▪ Reporting a net loss of $12.2 million or $0.37 per share for 3Q18, reflecting market weakness throughout the third quarter ▪ Meanwhile, MR rates have recovered from summer weakness and are increasing into winter months; strong rebound in crude tanker rates leading a general tanker market recovery ▪ MR tonne-mile demand growth is robust, underpinned by an estimated 1.4 mbd of oil consumption growth for 2019 matched by refinery capacity additions in trading-oriented locations ▪ The MR orderbook remains at a record-low of 4.7%; supply growth expected to be close to zero in 2018 and around 1% in 2019 ▪ IMO 2020 expected to be a game changer for tankers; increased seaborne volumes of compliant bunker fuels, greater arbitrage opportunities and oil trading activity, all contributing to a significant boost to tonne-mile demand ▪ We are maintaining strong liquidity and financial flexibility; quarter-end cash of $53 million on a pro forma basis and conservative leverage at 55% ▪ Ardmore is well positioned to benefit from the expected recovery in product tanker charter rates, with significant earnings power; each $1,000 / day increase in rates translating into 31 cents EPS

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