Investors

HAMILTON, Bermuda, Feb. 10, 2021 /PRNewswire/ -- Ardmore Shipping Corporation (NYSE: ASC) ("Ardmore", the "Company" or "we") today announced results for the twelve months and three months ended December 31, 2020.

Highlights and Recent Activity

• Reported a net loss of $6.0 million for the twelve months ended December 31, 2020 or $0.18 loss per basic and diluted share, which includes $6.5 million in respect of loss on the sale of the Ardmore Seamariner and unrealized losses on derivatives; earnings adjusted for these costs (see Adjusted earnings in the Non-GAAP Measures section) are $0.5 million, or $0.02 Adjusted earnings per basic and diluted share. This compares to a net loss of $22.9 million, or $0.69 loss per basic and diluted share for the twelve months ended December 31, 2019.

• Reported Adjusted EBITDA (see Non-GAAP Measures section) of $57.0 million for the twelve months ended December 31, 2020, as compared to $53.3 million for the twelve months ended December 31, 2019.

• Reported a net loss of $19.5 million for the three months ended December 31, 2020 or $0.59 loss per basic and diluted share, which includes $6.4 million in respect of loss on the sale of the Ardmore Seamariner; loss adjusted for these costs (see Adjusted loss in Non-GAAP Measures section) of $13.0 million for the three months ended December 31, 2020 or $0.39 Adjusted loss per basic and diluted share. This compares to a net income of $1.9 million, or $0.06 earnings per basic and diluted share for the three months ended December 31, 2019.

• Reported Adjusted EBITDA (see Non-GAAP Measures section) of $0.9 million for the three months ended December 31, 2020, as compared to $17.8 million for the three months ended December 31, 2019.

• MR tankers earned $15,650 per day overall and $15,993 for Eco-design MRs for the twelve months ended December 31, 2020 while chemical tankers earned $14,332 per day for the period. MR tankers earned $9,436 per day overall and $9,603 for Eco-design MRs for the three months ended December 31, 2020 while chemical tankers earned $10,916 per day for the period.

• In December 2020, Ardmore agreed to terms for the sale of the Ardmore Seamariner, a 2006-built 45,726 Dwt Eco-mod MR Tanker, which was sold for $10.0 million and delivered to the buyer on January 14, 2021.

• Repurchased 98,652 shares under Ardmore's new share repurchase plan in the fourth quarter of 2020, at a weighted-average price of $2.91 per share.

• Completed the previously announced $10.0 million loan facility for the Ardmore Seafarer with Iyo Bank, Japan. The facility has a duration of five years and is priced at LIBOR plus a margin of 2.25%.

• Ardmore expects to publish its first annual Progress Report on February 15, 2021, presenting what Ardmore has accomplished over the past year on matters relating to environment, social progress and governance and setting out its approach to supporting the global energy transition and the decarbonization of the shipping industry.

Anthony Gurnee, the Company's Chief Executive Officer, commented:

During 2020, the product tanker market experienced its most extreme period of volatility in many years. During the first half, MR charter rates rose to record highs, peaking at $77,000 per day, while the second half saw charter rates reach new lows as the pandemic impacted oil demand and cargo volumes. Overall, despite the pronounced weakness in the fourth quarter, we are pleased to report a profitable year, with adjusted earnings of $0.5 million, eco-design spot MR performance of $15,990, and year-end cash at $58 million.

MR charter rates so far in the first quarter have risen noticeably from fourth quarter lows, from $9,600 / day to $11,700 / day, driven by modest economic recovery and winter market activity. Our chemical tankers performed well on a relative basis in the fourth quarter, earning $10,900 / day; we expect chemical tanker performance to improve over the course of 2021, given the high correlation of demand to global GDP growth. Overall, we remain cautious about the first half of 2021, but believe the second half will bring rapidly improving market conditions and set the stage for a full recovery driven by above-trend demand growth and constrained product tanker supply growth.

Beyond the immediate post-pandemic recovery, we believe product tankers will experience continued overall demand growth to the end of the decade, with global economic growth and refinery developments away from points of consumption more than offsetting the initial impact of the energy transition; however, we expect the energy transition to put a significant damper on tanker supply as new regulations such as EEXI accelerate the phase-out of inefficient vessels, resulting in a tight market.

As we look forward to a brighter future for the tanker market and opportunities in the energy transition, we must not forget the challenges and hardships the ongoing pandemic presents, most of all for our seafarers, but also our shore staff in lockdown and in travel-related quarantine on our behalf. We acknowledge their sacrifices and want to thank them sincerely for their perseverance and professionalism.

Summary of Recent and Fourth Quarter 2020 Events

Fleet

Fleet Operations and Employment

As at December 31, 2020, the Company had 27 vessels in operation, including 21 MR tankers ranging from 45,000 deadweight tonnes (Dwt) to 49,999 Dwt (15 Eco-Design and six Eco-Mod) and six Eco-Design IMO 2 product / chemical tankers ranging from 25,000 Dwt to 37,800 Dwt.

MR Tankers (45,000 Dwt – 49,999 Dwt)

For the twelve months ended December 31, 2020, the MR tankers earned an average TCE rate of $15,650 per day. The Company's 15 Eco-Design MR tankers earned an average TCE rate of $15,993 for the twelve months ended December 31, 2020 and the Company's six Eco-Mod MR tankers earned an average TCE rate of $14,284 per day.

At the end of the fourth quarter of 2020, the Company had 21 MR tankers trading in the spot market or on short-term time charters. The MR tankers earned an average TCE rate of $9,436 per day in the fourth quarter of 2020. In the fourth quarter of 2020, the Company's 15 Eco-Design MR tankers earned an average TCE rate of $9,603 and the Company's six Eco-Mod MR tankers earned an average TCE rate of $9,052 per day.

In the first quarter of 2021, the Company expects to have 120 revenue days for its MR Eco-Design tankers on time charter, with the remaining days for its MR Eco-Design and all of its MR Eco-Mod tankers employed in the spot market. As of February 10, 2021, the Company had fixed approximately 45% of its total MR revenue days for the first quarter of 2021 at an average TCE rate of approximately $11,500 per day.

Product / Chemical Tankers (IMO 2: 25,000 Dwt – 37,800 Dwt)

For the twelve months ended December 31, 2020, the Company's six Eco-Design product / chemical vessels earned an average TCE rate of $14,332 per day.

At the end of the fourth quarter of 2020, the Company had six Eco-Design IMO 2 product / chemical tankers in operation, all of which were trading in the spot market. During the fourth quarter of 2020, the Company's six Eco-Design product / chemical vessels earned an average TCE rate of $10,916 per day.

In the first quarter of 2021, the Company expects to have all revenue days for its Eco-Design IMO 2 product / chemical tankers employed in the spot market. As of February 10, 2021, the Company had fixed approximately 75% of its Eco-Design IMO 2 product / chemical tankers spot revenue days for the first quarter of 2021 at an average TCE rate of approximately $11,000 per day.

Drydocking

The Company had 142 drydock days, including repositioning days, in the fourth quarter of 2020. The Company expects to have 40 drydock days, including repositioning days, in the first quarter of 2021.

Capital Allocation Policy

Consistent with the Company's capital allocation policy, the Company is not declaring a dividend for the fourth quarter of 2020.

Vessel Sale

In December 2020, Ardmore agreed to terms for the sale of the Ardmore Seamariner and repaid all amounts outstanding under the related term loan on January 7, 2021.  The price for the subsequent sale of the vessel by Ardmore was $10.0 million, which was paid upon delivery of the vessel to the buyer on January 14, 2021.

Share Repurchase Plan

During the three months ended December 31, 2020, the Company repurchased 98,652 shares under the new share repurchase plan the Company adopted in September 2020, at a weighted-average price of $2.91 per share.

Financing

On December 17, 2020, the Company completed the previously announced $10.0 million loan facility for the Ardmore Seafarer, a 2010 Japanese MR product tanker delivered in August 2020, with Iyo Bank, Japan. The facility has a duration of five years and is priced at LIBOR plus a margin of 2.25%. The covenants and other conditions of the facility are consistent with those of Ardmore's existing debt facilities.

Progress Report

The Company expects to publish its first annual Progress Report on February 15, 2021, presenting what has been accomplished over the past year on matters relating to environment, social progress and governance. The Report also discusses the philosophy and rationale behind our efforts in these areas, and importantly, lays out our approach to support the global energy transition and the decarbonization of the shipping industry.

COVID-19

On March 11, 2020, the World Health Organization declared the recent novel coronavirus (COVID 19) outbreak a pandemic. In response to the outbreak, many countries, ports and organizations, including those where the Company conducts a large part of its operations, have implemented measures to combat the outbreak, such as quarantines and travel restrictions. Such measures have caused and will likely continue to cause severe trade disruptions. The extent to which COVID–19 will impact the Company's results of operations and financial condition, including possible impairments, will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the virus and the measures taken to contain or treat its impact, among others. Accordingly, an estimate of the impact cannot be made at this time.

Results for the Three Months Ended December 31, 2020 and 2019

The Company reported a net loss of $19.5 million for the three months ended December 31, 2020, or $0.59 loss per basic and diluted share, as compared to net income of $1.9 million, or $0.06 earnings per basic and diluted share, for the three months ended December 31, 2019. Net loss for the three months ended December 31, 2020 includes the held for sale loss on the Ardmore Seamariner of $6.4 million.  The Company reported Adjusted EBITDA (see Non-GAAP Measures section) of $0.9 million for the three months ended December 31, 2020 as compared to $17.8 million for the three months ended December 31, 2019.

The Company reported an Adjusted loss (see Non–GAAP Measures section) of $13.0 million for the three months ended December 31, 2020, or $0.39 Adjusted loss per basic and diluted share, as compared to Adjusted earnings of $2.5 million, or $0.08 Adjusted earnings per basic and $0.07 Adjusted earnings per diluted share, for the three months ended December 31, 2019. 

Results for the Twelve Months Ended December 31, 2020 and 2019

The Company reported a net loss of $6.0 million for the twelve months ended December 31, 2020, or $0.18 loss per basic and diluted share, as compared to a net loss of $22.9 million, or $0.69 loss per basic and diluted share, for the twelve months ended December 31, 2019. Net loss for the twelve months ended December 31, 2020 includes the held for sale loss on the Ardmore Seamariner of $6.4 million. Net loss for the twelve months ended December 31, 2019 includes the aggregate loss of $13.2 million on the sales of the Ardmore Seamaster and the previous vessel named the Ardmore Seafarer. The Company reported Adjusted EBITDA (see Non-GAAP Measures section) of $57.0 million for the twelve months ended December 31, 2020, as compared to the $53.3 million for the twelve months ended December 31, 2019.

The Company reported Adjusted earnings (see Non-GAAP Measures section) of $0.5 million for the twelve months ended December 31, 2020, or $0.02 Adjusted earnings per basic and diluted share, as compared to an Adjusted loss of $9.2 million, or $0.28 Adjusted loss per basic and diluted share, for the twelve months ended December 31, 2019.

Management's Discussion and Analysis of Financial Results for the Three Months Ended December 31, 2020 and 2019

Revenue. Revenue for the three months ended December 31, 2020 was $41.7 million, a decrease of $19.0 million from $60.7 million for the three months ended December 31, 2019.

The Company's average number of owned vessels increased to 26 for the three months ended December 31, 2020, from 25 for the three months ended December 31, 2019. The Company had revenue days of 2,267 for the three months ended December 31, 2020, as compared to 2,280 for the three months ended December 31, 2019. The decrease in revenue days was due to an increase in drydocking days during the three months ended December 31, 2020, as compared to the three months ended December 31, 2019, partially offset by the increase in the Company's average number of owned vessels. The Company had 26 and 25 vessels employed directly in the spot market as at December 31, 2020 and 2019, respectively. The decrease in revenue days resulted in a decrease in revenue of $0.4 million, while changes in spot rates resulted in a decrease in revenue of $18.6 million for the three months ended December 31, 2020 as compared to the three months ended December 31, 2019.

Voyage Expenses. Voyage expenses were $19.9 million for the three months ended December 31, 2020, a decrease of $2.7 million from $22.6 million for the three months ended December 31, 2019. Voyage expenses decreased primarily due to the decrease in bunker prices for the three months ended December 31, 2020, as compared to the three months ended December 31, 2019.

TCE Rate. The average TCE rate for our fleet was $9,764 per day for the three months ended December 31, 2020, a decrease of $7,135 per day from $16,899 per day for the three months ended December 31, 2019. The decrease in average TCE rate was the result of lower spot rates for the three months ended December 31, 2020, as compared to the three months ended December 31, 2019. TCE rates represent net revenues (or revenue less voyage expenses) divided by revenue days.

Vessel Operating Expenses. Vessel operating expenses were $16.4 million for the three months ended December 31, 2020, an increase of $0.4 million from $16.0 million for the three months ended December 31, 2019. This increase is due to an increase in the average number of vessels in operation for the three months ended December 31, 2020, as well as the impact of COVID–19 and the timing of vessel operating expenses between quarters. Vessel operating expenses, by their nature, are prone to fluctuations between periods. Average fleet operating expenses per day, including technical management fees, were $6,518 per vessel for the three months ended December 31, 2020, as compared to $6,707 per vessel for the three months ended December 31, 2019.

Charter Hire Costs. Charter hire costs were $1.2 million for the three months ended December 31, 2020. There were no charter hire costs incurred in the three months ended December 31, 2019. Ardmore chartered in one vessel in September 2020.

Depreciation. Depreciation expense for the three months ended December 31, 2020 was $8.3 million, an increase of $0.3 million from $8.0 million for the three months ended December 31, 2019. This increase is primarily due to an increase in the average number of owned vessels for the three months ended December 31, 2020.

Amortization of Deferred Drydock Expenditures. Amortization of deferred drydock expenditures for the three months ended December 31, 2020 was $1.7 million, an increase of $0.3 million from $1.4 million for the three months ended December 31, 2019. The increase is primarily due to an increased number of drydockings as the Company's fleet ages. The deferred costs of drydockings for a given vessel are amortized on a straight-line basis to the next scheduled drydocking of the vessel.

General and Administrative Expenses: Corporate. Corporate-related general and administrative expenses for the three months ended December 31, 2020 were $3.1 million, a decrease of $0.5 million from $3.6 million for the three months ended December 31, 2019. This decrease is primarily due to a decrease in staff costs and no travel in the fourth quarter of 2020.

General and Administrative Expenses: Commercial and Chartering. Commercial and chartering expenses are the expenses attributable to the Company's chartering and commercial operations departments in connection with the Company's spot trading activities. Commercial and chartering expenses for the three months ended December 31, 2020 were $0.2 million, a decrease of $0.5 million from $0.7 million for the three months ended December 31, 2019. This decrease is due to lower headcount and no travel in the fourth quarter of 2020.

Interest Expense and Finance Costs. Interest expense and finance costs include loan interest, finance lease interest, and amortization of deferred finance fees. Interest expense and finance costs for the three months ended December 31, 2020 were $3.9 million, a decrease of $2.8 million from $6.7 million for the three months ended December 31, 2019. Cash interest expense decreased by $2.3 million to $3.4 million for the three months ended December 31, 2020, from $5.7 million for the three months ended December 31, 2019, primarily due to a decreased average LIBOR during the three months ended December 31, 2020, as compared to the three months ended December 31, 2019, as well as the Company entering into three-year floating-to-fixed interest rate swap agreements with an average fixed interest rate of 0.32%. Amortization of deferred finance fees for the three months ended December 31, 2020 was $0.5 million, a decrease of $0.5 million from $1.0 million for the three months ended December 31, 2019.

Liquidity

As at December 31, 2020, the Company had $58.4 million (December 31, 2019: $51.7 million) available in cash and cash equivalents. The Company drew down an additional $9.6 million from its revolving credit facilities in the fourth quarter in order to maintain a strong liquidity position and financial flexibility, resulting in an increase in amounts outstanding on these facilities. The following debt and lease liabilities (net of deferred finance fees) were outstanding as at the dates indicated:

Conference Call

The Company plans to have a conference call on February 10, 2021 at 10:00 a.m. Eastern Time to discuss its results for the quarter ended December 31, 2020. All interested parties are invited to listen to the live conference call and slide presentation by choosing from the following options:

1. By dialing 844–492–3728 (U.S.) or 412–542–4189 (International) and referencing "Ardmore Shipping."
2. By accessing the live webcast at Ardmore Shipping's website at www.ardmoreshipping.com.

Participants should dial into the call 10 minutes before the scheduled time.

If you are unable to participate at this time, an audio replay of the call will be available through February 17, 2021 at 877–344–7529 or 412–317–0088. Enter the passcode 10151864 to access the audio replay. A recording of the webcast, with associated slides, will also be available on the Company's website. The information provided on the teleconference is only accurate at the time of the conference call, and the Company will take no responsibility for providing updated information.

About Ardmore Shipping Corporation

Ardmore owns and operates a fleet of MR product and chemical tankers ranging from 25,000 to 50,000 deadweight tonnes. Ardmore provides seaborne transportation of petroleum products and chemicals worldwide to oil majors, national oil companies, oil and chemical traders, and chemical companies, with its modern, fuel-efficient fleet of mid-size product and chemical tankers.

We are strategically focused on modern, fuel-efficient, mid-size product and chemical tankers. We actively pursue opportunities to exploit the overlap we believe exists between the clean petroleum product ("CPP") and chemical sectors in order to enhance earnings, and also seek to engage in more complex CPP trades, such as multi-grade and multi-port loading and discharging operations, where our knowledge of chemical operations is beneficial to our CPP customers. Our fuel-efficient operations are designed to enhance our investment returns and provide value-added service to our customers. We believe we are at the forefront of fuel efficiency and emissions reduction trends and are well positioned to capitalize on these developments with our fleet of Eco-design and Eco-mod vessels. Our acquisition strategy is to continue to build our fleet with Eco-design newbuildings and modern second-hand vessels that can be upgraded to Eco-mod. We have a resolute focus on both high-quality service and efficient operations, and we believe that our corporate overhead and operating expenses are among the lowest of our peers.

CO₂ Emissions Reporting ⁽¹⁾

In April 2018, the International Maritime Organization's ("IMO") Marine Environment Protection Committee ("MEPC") adopted an initial strategy for the reduction of greenhouse gas ("GHG") emissions from ships, setting out a vision to reduce GHG emissions from international shipping and phase them out as soon as possible. Ardmore is committed to transparency and contributing to the reduction of CO₂ emissions in the Company's industry. Ardmore's reporting methodology is in line with the framework set out within the IMO's Data Collection System ("DCS") initiated in 2019.

Ardmore Performance

Ardmore is continuing to perform well, on an annual basis on both AER and EEOI.  Notably results vary quarter to quarter depending on ship activity, ballast / laden ratio, cargo carried, weather, waiting time and time in port, however analysis is presented on a trailing 12-month basis to provide an accurate assessment of Ardmore's progress and to mitigate any seasonality.
The impact of weather was higher in the quarter ended December 31, 2020 compared to prior periods (based on Beaufort Scale wind force rating being greater than 4), which adversely affects the ability to optimize fuel consumption.
Ardmore's carbon emissions for 2020 are 389,721 metric tonnes of CO2, a decrease of 7.9% in comparison to 2019. On an overall basis Ardmore's AER for the period decreased by 5.8% to 6.04 g / tm in 2020, from 6.41 g / tm in 2019.
While the EEOI shows a decrease of a 3.6% to 12.37 g / ctm, from 12.84 g / ctm.
Continued improvements are being achieved through a combination of technological advancements and operational optimization.

Non-GAAP Measures
This press release describes EBITDA, Adjusted EBITDA and Adjusted earnings / (loss), which are not measures prepared in accordance with U.S. GAAP and are defined and reconciled below. EBITDA is defined as earnings before interest, taxes, depreciation and amortization.  Adjusted EBITDA is defined as EBITDA before certain items that Ardmore believes are not representative of its operating performance, including gain or loss on sale of vessels. Adjusted earnings / (loss) excludes certain items from net income / (loss), including gain or loss on sale of vessels and write-off of deferred finance fees, because they are considered to be 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. EBITDA and Adjusted EBITDA increases the comparability of the Company's fundamental performance from period to period. This increased comparability is achieved by excluding the potentially disparate effects between periods of interest expense, taxes, depreciation or amortization, which items are affected by various and possibly changing financing methods, capital structure and historical cost basis and which items may significantly affect net income between periods. The Company believes that including EBITDA, Adjusted EBITDA and Adjusted earnings / (loss) as financial and operating measures assists investors in making investment decisions regarding the Company and its common stock.

These non-GAAP measures should not be considered in isolation from, as a substitute for, or superior to, financial measures prepared in accordance with U.S. GAAP. In addition, these non-GAAP measures may not have a standardized meaning and therefore may not be comparable to similar measures presented by other companies. All amounts in the tables below are expressed in U.S. dollars, unless otherwise stated.

Forward Looking Statements

Matters discussed in this press release may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. In some cases, you can identify the forward-looking statements by the use of words such as "believe", "anticipate", "intends", "estimate", "forecast", "plan", "potential", "may", "expect", and similar expressions.

Forward looking statements in this press release include, among others, the following statements: future operating or financial results; global and regional economic conditions and trends; shipping market trends and market fundamentals, including tanker demand and future growth rates; the effect of the novel coronavirus pandemic on the Company's business, financial condition and the results of operation; the Company's expectations regarding the timing and impact of economic recovery from the novel coronavirus pandemic; expected employment of the Company's vessels during the first quarter of 2021; expected drydocking days in the first quarter of 2021; management's estimates of the Depreciated Replacement Value (DRV) of its vessels; management's estimate of the value of the Company's commercial management and pooling business; and trends in the Company's  performance as measured by energy efficiency and emission-reduction metrics; regarding emissions; the impact of energy transition on the Company and the markets in which the Company operates; expected timing of publication of Progress Report on Ardmore's ESG goals; and expected continuation of refinement by the shipping industry of performance measures for emissions and efficiency. The forward-looking statements in this press release are based upon various assumptions, including, without limitation, Ardmore management's examination of historical operating trends, data contained in the Company's records and other data available from third parties. Although the Company believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond the Company's control, the Company cannot assure you that it will achieve or accomplish these expectations, beliefs or projections. The Company cautions readers of this release not to place undue reliance on these forward-looking statements, which speak only as of their dates. The Company undertakes no obligation to update or revise any forward-looking statements. These forward-looking statements are not guarantees of the Company's future performance, and actual results and future developments may vary materially from those projected in the forward-looking statements.

In addition to these important factors, other important factors that, in the Company's view, could cause actual results to differ materially from those discussed in the forward-looking statements include: the amount of the world tanker fleet used for storage purposes; current expected spot rates compared with current and expected charter rates; the failure of counterparties to fully perform their contracts with the Company; the strength of world economies and currencies; general market conditions, including fluctuations in charter rates and vessel values; changes in demand for and the supply of tanker vessel capacity; changes in the projections of spot and time charter or pool trading of the Company's vessels; the effect of the novel coronavirus pandemic on, among others, oil demand, the Company's business, financial condition and results of operation, including our liquidity; fluctuations in oil prices; changes in the Company's operating expenses, including bunker prices, drydocking and insurance costs; general domestic and international political conditions; potential disruption of shipping routes due to accidents, piracy or political events; the market for the Company's vessels; competition in the tanker industry; availability of financing and refinancing; charter counterparty performance; changes in governmental rules and regulations or actions taken by regulatory authorities; the Company's ability to charter vessels for all remaining revenue days during the first quarter of 2021 in the spot market; vessels breakdowns and instances of off-hire; and other factors. Please see the Company's filings with the U.S. Securities and Exchange Commission, including the Company's Form 20–F for the year ended December 31, 2020, for a more complete discussion of these and other risks and uncertainties.

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SOURCE Ardmore Shipping Corporation