Ardmore Shipping Corporation Announces Financial Results for Second Quarter 2013

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Ardmore Shipping Corporation Announces Financial Results for Second Quarter 2013

CORK, Ireland--(BUSINESS WIRE)-- Ardmore Shipping Corporation (NYS: ASC) ("Ardmore" or the "Company) today announced results for the three and six months ended June 30, 2013. A summary of the recent and second quarter highlights are as follows:

Highlights

  • The Company raised $140 million of gross proceeds in its initial public offering ("IPO") of common stock, par value $0.01, which closed on August 6, 2013. In connection with its IPO, the Company listed its common stock on the New York Stock Exchange and trading commenced on August 1, 2013.
  • Signed contracts for the construction of ten newbuildings at yards in South Korea and Japan which are expected to be delivered in 2014 and 2015 for a total of $319.8 million, increasing the Ardmore fleet to 20 ships consisting of eight vessels in operation and 12 vessels on order.
  • Entered into a commercial management arrangement with Mansel Limited, a subsidiary of the Vitol Group, for employment of six eco-design MR product tankers.
  • Accepted delivery of the Company's second newbuilding, the Ardmore Seaventure from SPP Shipbuilding Co. Ltd, which commenced employment under a one year time charter with Cargill International S.A. ("Cargill").
  • Renewed the time charter for the Ardmore Seafarer in July, for one year at an increased rate with Itochu Enex Co. Ltd.
  • Entered into a commercial management arrangement with Nordic Womar Pte Ltd to spot charter the Ardmore Centurion in chemical and product trades.
  • Reported adjusted EBITDA of $3.0 million (see Non-GAAP Measures section below) in the three months ended June 30, 2013, an increase of $0.9 million from the three months ended June 30, 2012. The Company reported an adjusted net loss of $0.7 million (see Non-GAAP Measures section below), or $0.04 basic and diluted adjusted loss per share, for the three months ended June 30, 2013. Including IPO related expenses and deferred finance fees written off in the period, the net loss was $1.2 million, or $0.07 basic and diluted loss per share, for the period.

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

"It is my pleasure to present Ardmore's first earnings release as a public company and to outline a number of significant transactions concluded in the past few weeks. We are pleased with Ardmore's successful listing on New York Stock Exchange on August 1, 2013 and the calibre of investors who chose to participate in the offering. We believe it is a highly opportune time to invest in our sectors and we look forward to building the value of Ardmore for our investors.

"As part of our expansion, we are pleased to announce a commercial management arrangement with Mansel Limited, the in-house shipping arm of Vitol SA. The arrangement is for the employment of six MR product tankers on a pooling and time charter basis. Ardmore's chartering policy is to balance time charters and spot employment with customers having large cargo volumes in an effort to maximise commercial flexibility, manage cash flow visibility, andprovide shareholders with upside in an improving market. The arrangement with Mansel is a significant step for Ardmore given Vitol's strong position in the global oil market. We look forward to providing Vitol with high quality service with these brand new, fuel efficient vessels."

Mr Gurnee continued: "We are very satisfied with Ardmore's progress in furtherance of our business strategy by adding ten newbuildings to the fleet in recent weeks at attractive prices from high quality yards. Our recent orders increase our total fleet to 20 ships which consists of approximately 80% MR tankers by cargo capacity. As a consequence, we believe that Ardmore is well positioned to take advantage of improvements in the charter market for both products and chemicals."

Summary of Recent and Second Quarter Events

Initial Public Offering

On August 6, 2013, the Company completed its IPO of 10,000,000 shares of its common stock, par value $0.01, at $14.00 per share. The gross proceeds to the Company from the IPO were $140 million before deducting underwriting discounts and commission and IPO related expenses. The underwriters have an over-allotment option to purchase up to an additional 1,500,000 shares at $14.00 per share which expires on August 30, 2013.

Commercial Arrangement with Vitol Group companies

In July 2013, Ardmore agreed to terms for a commercial arrangement for the employment of six MR product tankers with Mansel Limited. Two of the vessels will be employed on a time charter arrangement and four vessels will be employed under a commercial pooling arrangement. All six vessels will operate as part of Mansel's MR product tanker fleet.

Mansel Limited is the commercial shipping arm of Vitol SA, one of the largest independent energy trading companies. Mansel's activities complement the core cargo flows and it seeks to maximise utilization of its fleet through access to third party and internal cargos.

Vessel Acquisitions

SPP Shipbuilding Co. Ltd - Four Newbuildings

On July 16, 2013, Ardmore agreed to acquire two 50,300 Dwt IMO 3 eco-design product tankers ordered from SPP Shipbuilding Co. Ltd, South Korea. ("SPP"). On August 8, 2013, the Company exercised options on two additional 50,300 Dwt IMO 3 eco-design product tankers. The four vessels have a total contract cost of approximately $136,400,000 inclusive of ballast water treatment systems. Ardmore expects to take delivery of these vessels from SPP commencing in the first quarter 2015.

Hyundai Mipo Dockyard Co. Ltd - Two Newbuildings

On August 14, 2013, Ardmore executed contracts for the construction of two 37,000 Dwt IMO 2 eco-design chemical tankers ordered from Hyundai Mipo Dockyard Co. Ltd, South Korea ("HMD") for approximately $32.7 million each with options for further equipment upgrades. As part of the contracts, Ardmore has also negotiated fixed price options for additional vessels. Ardmore expects to take delivery of the contracted vessels in the fourth quarter 2014 or in the first quarter 2015.

Fukuoka Shipbuilding Co. Ltd - Four Newbuildings

On August 21, 2013, Ardmore executed contracts for the construction of four 25,000 Dwt IMO 2 eco-design chemical tankers ordered from Fukuoka Shipbuilding Co. Ltd., Japan ("Fukuoka") for a total contract price of approximately $118,000,000. As part of the contracts, Ardmore has also negotiated fixed price options for additional vessels. Ardmore expects to take delivery of the contracted vessels between fourth quarter 2014 and fourth quarter 2015.

Vessel Deliveries

On June 7, 2013, the Company took delivery of the Ardmore Seaventure. This vessel is built to the latest eco-design and includes upgrades for further improvements to enhance fuel efficiency. The Ardmore Seaventure began employment on a one-year time charter with Cargill at a rate of $19,500 per day for the first 60 days and $15,100 thereafter. Cargill is an international producer and marketer of food, agricultural, financial and industrial products and services.

Vessel Employment

In July 2013, the Company renewed the time charter for the Ardmore Seafarer at an improved rate of $13,750 per day. In addition, the charter rate includes a performance bonus of up to $250 per day. The new charter is scheduled to expire in July 2014.

On August 3, 2013 following redelivery of the Ardmore Centurion from previous charterers, the Company delivered the vessel to Nordic Womar Pte Ltd to operate it under a third party spot chartering arrangement. The third party spot chartering arrangement does not have a fixed expiration period.

Financing

On April 2, 2013, Ardmore entered into a capital lease agreement (bareboat charter) for the Ardmore Calypso and Ardmore Capella. In connection with the transaction, $17.9 million of outstanding senior debt was repaid in full. The capital lease is scheduled to expire in 2018 and includes a mandatory purchase obligation. The total amount financed under the capital lease arrangement was $31.5 million.

Results for the six months ended June 30, 2013 and 2012

For the six months ended June 30, 2013, the Company had an adjusted EBITDA (see Non-GAAP Measures section below) of $5.5 million, an increase of $2.2 million from the six months ended June 30, 2012. The Company had an adjusted net loss (see Non-GAAP Measures section below) of $0.7 million, or $0.04 basic and diluted loss per share, excluding $0.4 million of fees and expenses incurred in connection with our IPO and $0.2 million of deferred finances fees written off in relation to the repayment of senior loan facilities on two vessels. This compared to an adjusted net loss of $1.7 million for the six months ended June 30, 2012 or $0.10 basic and diluted loss per share.

On an unadjusted basis, the Company reported a net loss of $1.2 million, or $0.07 basic and diluted loss per share, for the six months ended June 30, 2013, as compared to a net loss of $1.7 million, or $0.10 basic and diluted loss per share, for the six months ended June 30, 2012.

Results for the three months ended June 30, 2013 and 2012

For the three months ended June 30, 2013, the Company had an adjusted EBITDA (see Non-GAAP Measures section below) of $3.0 million, an increase of $0.9 million from the three months ended June 30, 2012. The Company had an adjusted net loss (see Non-GAAP Measures section below) of $0.7 million, or $0.04 basic and diluted loss per share, excluding $0.4 million of non-recurring fees and expenses incurred in connection with our initial public offering ("IPO") and $0.2 million of deferred finances fees written off in relation to the repayment of senior loan facilities on two vessels. This compared to an adjusted net loss of $0.5 million for the three months ended June 30, 2012, or $0.03 basic and diluted loss per share.

On an unadjusted basis, the Company reported a net loss of $1.2 million, or $0.07 basic and diluted loss per share, for the three months ended June 30, 2013 as compared to a net loss of $0.5 million, or $0.03 basic and diluted loss per share, for the three months ended June 30, 2012.

Management's Discussion and Analysis of Financial Results

Revenue for the three months ended June 30, 2013 was $8.3 million, an increase of $1.3 million, or 18.6%, from $7.0 million for the three months ended June 30, 2012. Product tanker revenue was $5.6 million for the three months ended June 30, 2013, an increase of $2.1 million, or 61.6%, from $3.5 million for the three months ended June 30, 2012. The increase primarily relates to additional revenue attributable to the Ardmore Seavaliant and Ardmore Seaventure, which were delivered to us on February 27, 2013 and June 7, 2013, respectively. Chemical tanker revenue on owned vessels was $2.8 million for the three months ended June 30, 2013, as compared to $2.8 million for the three months ended June 30, 2012. Ardmore previously chartered-in two chemical tankers, the Hellespont Crusader and the Hellespont Commander, commencing on May 12, 2011 and July 17, 2011, respectively. These vessels were redelivered to the owner on May 29, 2012 and June 23, 2012. These chartered-in vessels contributed $0 to revenue for the three months ended June 30, 2013 and contributed $0.8 million to revenue for the three months ended June 30, 2012.

Commissions and voyage related costs were $0.15 million for the three months ended June 30, 2013, a decrease of $0.02 million, or 12%, from $0.17 million for the three months ended June 30, 2012.

Vessel operating expenses were $4.4 million for the three months ended June 30, 2013, an increase of $1.0 million, or 29.2%, from $3.4 million for the three months ended June 30, 2012. Fleet operating costs per day (defined under Unaudited Other Operating Data below) were $6,443 for the three months ended June 30, 2013, an increase of $458, or 7.7%, from $5,985 for the three months ended June 30, 2012. The increase in vessel operating expenses primarily relates to additional vessels in operation and timing of vessel expenses.

We did not incur any charter hire costs during the three months ended June 30, 2013 as we redelivered our chartered-in vessels on May 29, 2012 and June 23, 2012, respectively. Charter hire costs were $0.8 million in the three months ended June 30, 2012.

Depreciation expense for the three months ended June 30, 2013 was $2.0 million, an increase of $0.4 million, or 25% from $1.6 million for the three months ended June 30, 2012. The increase is due to an increase in the average number of owned vessels to 7.2 from 6.0 for the three months ended June 30, 2013 and 2012, respectively, as a result of the delivery of the Ardmore Seavaliant and Ardmore Seaventure. Amortization of deferred drydock expenditure for the three months ended June 30, 2013 was $0.4 million, an increase of $0.4 million from $0 for the three months ended June 30, 2012. There were no vessels drydocked by Ardmore prior to June 30, 2012.

General and administrative expenses for the three months ended June 30, 2013 were $1.2 million, an increase of $0.5 million, or 71% from $0.7 million for the three months ended June 30, 2012. The increase is primarily due to IPO-related costs of approximately $0.4 million incurred in the three months ended June 30, 2013.

Interest expense and finance costs, which include loan interest, capital lease interest and amortization of deferred financing fees, were $1.4 million for the three months ended June 30, 2013, an increase of $0.4 million, or 40% from $1.0 million for the three months ended June 30, 2012. The variance was driven by an increase in our average debt balance due to the delivery of two vessels (the Ardmore Seavaliant and Ardmore Seaventure), additional interest costs associated with the capital lease facility for the Ardmore Calypso and Ardmore Capella executed in April 2013 and a write-off of $0.2 million of deferred financing fees upon the repayment of senior debt in connection with the capital lease. These increases were partially offset by a decrease in interest costs associated with our revolving credit facility and an increase in the amount of capitalized interest.

Liquidity

As of June 30, 2013, the Company had $9.9 million in cash and $50.0 million available to draw down from its revolving credit facility. Following completion of the IPO, the Company had approximately $138.3 million in cash as at August 6, 2013. The revolving credit facility was repaid and discontinued in conjunction with the IPO.

The following debt and capital lease liabilities were outstanding as of June 30, 2013:

          As at
Jun 30, 2013   Dec 31, 2012
Debt$93,410,00067,100,000
Capital Leases31,140,399-
Revolving Credit Facility--
Total$124,550,39967,100,000

Dividend Policy

Ardmore currently intends to pay our stockholders quarterly dividends of $0.10 per share, or $0.40 per share per year. The Company expects to pay an initial dividend of $0.066 per share commencing in November 2013.

Conference Call

The Company will have a conference call on Monday August 26, 2013 at 11.00 AM Eastern Daylight Time. Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 888-539-3678 (U.S.) or 719-457-2648 (International). The conference participant passcode is 8898817. To access the live webcast please visit: www.ardmoreshipping.com. If you are unable to participate at this time, a replay of the call will be available for two weeks at 888-203-1112 or 719-457-0820. Enter the passcode 8898817 to access the audio replay.

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 Shipping Corporation, a company incorporated in the Republic of the Marshall Islands, provides seaborne transportation of petroleum products and chemicals worldwide to oil majors, national oil companies, oil and chemical traders, and chemical companies, with our modern, fuel-efficient fleet of mid-size product and chemical tankers. Our fleet consists of 20 vessels including eight in operation and 12 on order with deliveries expected to begin in January 2014. We are strategically focused on modern, fuel-efficient mid-size product and chemical tankers. Our fuel-efficient operations are designed to enhance our investment returns and provide value-added service to our customers.

Ardmore Shipping LLC Predecessor to Ardmore Shipping Corporation
Unaudited Condensed Interim Consolidated Balance Sheet
(Expressed in U.S. Dollars, unless otherwise stated)

                            As at
ASSETSJun 30, 2013   Dec 31, 2012
Current assets
Cash and cash equivalents$9,855,95015,334,123
Receivables, trade874,991864,386
Working capital advances939,1191,573,955
Prepayments372,336223,471
Advances and deposits987,595423,703
Other receivables198,491498,259
Amounts due from related parties--
Inventories977,694666,240
Total current assets14,206,17619,584,137
 
Non-current assets
Vessels and vessel equipment, net201,614,852125,478,619
Deferred dry dock expenditure, net2,054,4252,517,789
Vessels under construction16,518,15029,012,560
Other non-current assets, net589,555133,147
Deferred finance charges, net3,975,9593,234,216
Total non-current assets224,752,941160,376,331
  
TOTAL ASSETS238,959,117179,960,468
 
LIABILITIES AND EQUITY
Current liabilities
Payables, trade4,340,3172,514,052
Charter revenue received in advance1,241,426851,045
Other payables466,2491,867
Amounts due to related parties600,000600,000
Accrued interest on loans594,004502,515
Short-term revolving credit facility--
Current portion of long-term debt9,100,0006,819,918
Current portion of capital lease obligations1,519,486-
Total current liabilities17,861,48211,289,397
 
Non-current liabilities
Non-current portion of long-term debt84,310,00060,280,082
Non-current portion of capital lease obligations29,620,913-
Total non-current liabilities113,930,91360,280,082
 
Equity
Share capital100100
Additional paid in capital117,078,877117,073,252
Accumulated deficit(9,912,255)(8,682,363)
Total equity107,166,722108,390,989
  
TOTAL LIABILITIES AND EQUITY$238,959,117179,960,468

Ardmor

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