HAMILTON, Bermuda, Feb. 15, 2024 /PRNewswire/ — Ardmore Shipping Corporation (NYSE:ASC) (“Ardmore”, the “Company” or “we”) today announced results for the three and twelve months ended December 31, 2023.
Highlights and Recent Activity
Reported net income of $26.1 million for the three months ended December 31, 2023, or $0.63 earnings per basic and diluted share, compared to net income of $53.1 million, or $1.31 earnings per basic share and $1.28 earnings per diluted share for the three months ended December 31, 2022. We reported Adjusted earnings of $26.1 million for the three months ended December 31, 2023, or $0.63 Adjusted earnings per basic and diluted share, compared to Adjusted earnings of $54.0 million for the three months ended December 31, 2022, or $1.33 Adjusted earnings per basic share and $1.30 Adjusted earnings per diluted share (see Adjusted earnings in the Non-GAAP Measures section).
Reported net income of $113.4 million for the year ended December 31, 2023, or $2.76 earnings per basic share and $2.71 earnings per diluted share, compared to net income of $135.1 million, or $3.63 earnings per basic and $3.52 earnings per diluted share, for the year ended December 31, 2022. We reported Adjusted earnings of $113.4 million for the year ended December 31, 2023, or $2.76 Adjusted earnings per basic share and $2.71 Adjusted earnings per diluted share, compared to Adjusted earnings of $143.5 million for the year ended December 31, 2022, or $3.86 Adjusted earnings per basic share and $3.74 Adjusted earnings per diluted share (see Adjusted earnings in the Non-GAAP Measures section).
Consistent with the Company’s variable dividend policy of paying out dividends on its shares of common stock equal to one-third of Adjusted earnings, the Board of Directors declared a cash dividend on February 15, 2024, of $0.21 per common share for the quarter ended December 31, 2023. The dividend will be paid on March 15, 2024, to all shareholders of record on February 29, 2024.
MR Eco-Design tankers earned an average spot TCE rate of $32,542 per day for the three months ended December 31, 2023. Chemical tankers earned an average TCE rate of $26,107 per day for the three months ended December 31, 2023. Based on approximately 60% total revenue days currently fixed for the first quarter of 2024, the average spot TCE rate is approximately $35,400 per day for MR Eco-Design tankers; based on approximately 70% of revenue days fixed for the first quarter of 2024, the average TCE rate for chemical tankers is approximately $26,700 per day.
In February 2024, as part of a gradual fleet modernization, the Company has agreed to acquire a 2017 Japanese-built MR product tanker for $42.0 million, and in a separate transaction has agreed to sell the 2010-built Ardmore Seafarer for $27.1 million. Both transactions are expected to conclude in the quarter ending March 31, 2024.
In February 2024, the Company time chartered-out one of its chartered-in MR tankers for the remainder of its charter-in period at a rate representing a $2.7 million premium over the charter-in rate.
In the fourth quarter of 2023, we completed the installation of modular, carbon capture-ready scrubbers on two additional vessels during scheduled drydockings.
Anthony Gurnee, the Company’s Chief Executive Officer, commented:
“The product and chemical tanker markets remain strong as a result of tight supply / demand fundamentals further accentuated by large-scale geopolitical and weather-related trading restrictions. The simultaneous restrictions in the Panama Canal and Suez Canal are currently driving substantial incremental tonne-mile demand; while the ultimate duration of these canal restrictions remains to be seen, this is having a pronounced impact during the seasonally stronger winter season. At the same time, we must acknowledge the key role of our seafarers in this increasingly volatile world and we continue to place their security as our top priority.
After another successful year of delivering strong results for our shareholders in 2023, Ardmore is navigating this supportive market with financial discipline and a constant focus on performance optimization. We continue to utilize the strong earnings environment to pursue all of our capital allocation priorities simultaneously, further strengthening our balance sheet, investing in a gradual fleet modernization along with vessel optimization and emissions reduction for our existing fleet, and returning capital to shareholders via an attractive quarterly dividend.”
Summary of Recent and Fourth Quarter 2023 Events
Fleet
Fleet Operations and Employment
As of December 31, 2023, the Company had 26 vessels in operation (including four chartered-in vessels), consisting of 20 MR tankers ranging from 45,000 deadweight tonnes (“dwt”) to 49,999 dwt (15 Eco-Design and five Eco-Mod) and six Eco-Design IMO 2 product/chemical tankers ranging from 25,000 dwt to 37,800 dwt. The Company also commercially manages one of Carl Büttner’s 24,000 dwt chemical tankers.
MR Tankers (45,000 dwt – 49,999 dwt)
At the end of the fourth quarter of 2023, the Company had 20 MR tankers in operation, all of which were trading in the spot market. The MR tankers earned an average TCE rate of $30,858 per day in the fourth quarter of 2023. In the fourth quarter of 2023, the Company’s 15 MR Eco-Design tankers earned an average TCE rate of $32,542 and the Company’s five MR Eco-Mod tankers earned an average TCE rate of $26,282 per day.
In the first quarter of 2024, the Company expects to have all revenue days for its MR tankers employed in the spot market. As of February 15, 2024, the Company had fixed approximately 60% of its total MR revenue days for the first quarter of 2024 at an average TCE rate of approximately $34,400 per day, which includes MR Eco-Design tankers at $35,400 per day and MR Eco-Mod tankers at $31,850 per day.
Product / Chemical Tankers (IMO 2: 25,000 dwt – 37,800 dwt)
At the end of the fourth quarter of 2023, 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 2023, the Company’s six Eco-Design product / chemical vessels earned an average TCE rate of $26,107 per day.
In the first quarter of 2024, 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 15, 2024, the Company had fixed approximately 70% of its Eco-Design IMO 2 product / chemical tankers revenue days for the first quarter of 2024 at an average TCE rate of approximately $26,700 per day.
Drydocking
The Company had 82 drydocking days in the fourth quarter of 2023. The Company is currently scheduled to have 93 drydocking days in the first quarter of 2024.
Dividend on Common Shares
Consistent with the Company’s variable dividend policy of paying out dividends on its shares of common stock equal to one-third of Adjusted earnings, as calculated for dividends (see Adjusted earnings (for purposes of dividend calculations) in the Non-GAAP Measures section), the Board of Directors declared a cash dividend on February 15, 2024 of $0.21 per common share for the quarter ended December 31, 2023. The dividend will be paid on March 15, 2024, to all shareholders of record on February 29, 2024.
Subsequent Fleet Development
In February 2024, as part of a gradual fleet modernization, Ardmore has agreed to acquire a 2017 Japanese-built MR product tanker for $42.0 million, and in a separate transaction has agreed to sell the 2010-built Ardmore Seafarer for $27.1 million. Both transactions are expected to conclude in the quarter ending March 31, 2024.
In February 2024, Ardmore time chartered-out one of its chartered-in MR tankers for the remainder of its charter-in period at a rate representing a $2.7 million premium over the charter-in rate.
Scrubber Installations
In the fourth quarter of 2023, the Company completed the installation of modular, carbon capture-ready scrubbers on two additional vessels during their scheduled drydockings. Prior to the end of 2024, the Company intends to install scrubber systems on an additional five vessels during their scheduled drydockings.
Geopolitical Conflicts
The ongoing Russia–Ukraine war has disrupted energy supply chains, caused instability and significant volatility in the global economy and resulted in economic sanctions by several nations. The ongoing conflict has contributed significantly to related increases in spot tanker rates.
Geopolitical tensions have increased since commencement of the Israel-Hamas war in October 2023. Since mid-December 2023, Houthi rebels in Yemen have carried out numerous attacks on vessels in the Red Sea area. As a result of these attacks, many shipping companies have routed their vessels away from the Red Sea, which has affected trading patterns, rates and expenses. Further escalation or expansion of hostilities of such crisis could continue to affect the price of crude oil and the oil industry, the tanker industry and demand for the Company’s services.
Results for the Three Months Ended December 31, 2023 and 2022
The Company reported net income of $26.1 million for the three months ended December 31, 2023, or $0.63 earnings per basic and diluted share, as compared to net income of $53.1 million, or $1.31 earnings per basic and $1.28 earnings per diluted share for the three months ended December 31, 2022.
Results for the Years Ended December 31, 2023 and 2022
The Company reported net income of $113.4 million for the year ended December 31, 2023, or $2.76 earnings per basic share and $2.71 earnings per diluted share, as compared to net income of $135.1 million, or $3.63 earnings per basic and $3.52 earnings per diluted share for the year ended December 31, 2022.
Management’s Discussion and Analysis of Financial Results for the Three Months Ended December 31, 2023 and 2022
Revenue. Revenue for the three months ended December 31, 2023 was $98.9 million, a decrease of $33.9 million from $132.8 million for the three months ended December 31, 2022.
The Company’s average number of operating vessels was 26.0 for the three months ended December 31, 2023, compared to 27.0 for the three months ended December 31, 2022.
The Company had 2,293 spot revenue days for the three months ended December 31, 2023, as compared to 2,399 for the three months ended December 31, 2022. The Company had 26 vessels employed directly in the spot market as of December 31, 2023, as compared to 27 vessels as of December 31, 2022. Changes in spot rates resulted in a decrease in revenue of $27.1 million and the decrease in spot revenue days resulted in a decrease in revenue of $5.8 million for the three months ended December 31, 2023, as compared to the three months ended December 31, 2022.
The Company had no product tankers employed under time charter as of December 31, 2023 and as of December 31, 2022. There were no revenue days derived from time charters for the three months ended December 31, 2023, as compared to 47 for the three months ended December 31, 2022. The decrease in revenue days for time-chartered vessels resulted in a decrease in revenue of $1.0 million for the three months ended December 31, 2023.
Voyage Expenses. Voyage expenses were $33.2 million for the three months ended December 31, 2023, a decrease of $6.3 million from $39.5 million for the three months ended December 31, 2022. The overall decrease included a $4.7 million decrease from lower bunker prices and a $1.6 million decrease in port and agency expenses plus commission costs.
TCE Rate. The average TCE rate for the Company’s fleet was $29,702 per day for the three months ended December 31, 2023, a decrease of $9,159 per day from $38,861 per day for the three months ended December 31, 2022. The decrease in average TCE rate was primarily the result of lower spot rates for the three months ended December 31, 2023, as compared to the three months ended December 31, 2022, which was partially offset by a decrease in bunker prices. TCE rates represent net revenues (a non-GAAP measure representing revenue less voyage expenses) divided by revenue days. Net revenue utilized to calculate TCE is determined on a discharge-to-discharge basis, which is different from how we record revenue under U.S. GAAP.
Vessel Operating Expenses. Vessel operating expenses were $15.1 million for the three months ended December 31, 2023, an increase of $0.9 million from $14.2 million for the three months ended December 31, 2022. This increase was driven by a one-time change in technical manager for a portion of our fleet, as well as the timing of certain vessel operating expenses between quarters. Vessel operating expenses, by their nature, are prone to fluctuations between periods.
Charter Hire Costs. Total charter hire expense was $5.7 million for the three months ended December 31, 2023, a decrease of $0.3 million from $6.0 million for the three months ended December 31, 2022. This decrease is the result of the Company having an average of 4.0 vessels chartered-in during the three months ended December 31, 2023, compared to an average of 5.0 vessels chartered-in for the three months ended December 31, 2022, partially offset by an increase in charter hire rates. Total charter hire expense for the three months ended December 31, 2023 was comprised of an operating expense component of $3.0 million and a vessel lease expense component of $2.7 million.
Depreciation. Depreciation expense for the three months ended December 31, 2023 was $7.1 million, a decrease of $0.2 million from $7.3 million for the three months ended December 31, 2022. This decrease is attributable to the change in the scrap value of each vessel from $300 per lightweight ton (“lwt”) to $400 per lwt during the first quarter of 2023.
Amortization of Deferred Drydock Expenditures. Amortization of deferred drydock expenditures for the three months ended December 31, 2023 was $0.9 million, a decrease of $0.1 million from $1.0 million for the three months ended December 31, 2022. Deferred drydocking costs 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, 2023 were $5.7 million, an increase of $0.4 million from $5.3 million for the three months ended December 31, 2022. The increase in costs was driven by non-recurring items, including the impact of foreign exchange, of $0.4 million for the three months ended December 31, 2023, as compared to the three months ended December 31, 2022.
General and Administrative Expenses: Commercial and Chartering. Commercial and chartering expenses are the expenses attributable to Ardmore’s chartering and commercial operations departments in connection with its spot trading activities. Commercial and chartering expenses for the three months ended December 31, 2023 were $1.4 million, a slight increase of $0.1 million from $1.3 million for the three months ended December 31, 2022.
Unrealized (Loss) on Derivatives. Unrealized loss on derivatives was $0.2 million for the three months ended December 31, 2023, as compared to an unrealized loss of $1.3 million, relating to interest rate swaps, for the three months ended December 31, 2022.
Interest Expense and Finance Costs. Interest expense and finance costs for the three months ended December 31, 2023 were $2.7 million, an increase of $0.7 million from $2.0 million for the three months ended December 31, 2022. The increase in costs was primarily due to rising interest rates during 2023. Amortization of deferred finance fees for the three months ended December 31, 2023 was $0.3 million, a slight decrease from $0.4 million for the three months ended December 31, 2022.
Liquidity
As of December 31, 2023, the Company had $268.0 million in liquidity available, with cash and cash equivalents of $46.8 million (December 31, 2022: $50.6 million) and amounts available and undrawn under its revolving credit facilities of $221.2 million (December 31, 2022: $170.0 million). The following debt and lease liabilities (net of deferred finance fees) were outstanding as of the dates indicated:
As of
In thousands of U.S. Dollars
December 31, 2023
December 31, 2022
Cash and cash equivalents
$
46,805
$
50,569
Finance leases
43,643
45,500
Senior Debt
45,094
103,112
Revolving Credit Facilities
932
25,684
Total debt
89,669
174,296
Total net debt
$
42,864
$
123,727
Conference Call
The Company plans to host an Investor Day and conference call on February 15, 2024, at 12:00 p.m. Eastern Time during which the financial results for the quarter ended December 31, 2023 will be discussed. All interested parties are invited to listen to the live conference call and review the related slide presentation by choosing from the following options:
By dialing 800–836–8184 (U.S.) or 646-357-8785 (International) and referencing “Ardmore Shipping.”
By accessing the live webcast at Ardmore’s website at www.ardmoreshipping.com.
Participants should dial into the call 10 minutes before the scheduled time.
Institutional investors who wish to attend the event in person, as well as remote participants who wish to submit a question for the Q&A portion of the event, are advised to contact The IGB Group at Ardmore@igbir.com
If you are unable to participate at this time, an audio replay of the call will be available through February 22, 2024 at 888-660-6345 or 646-517-4150. Enter the passcode 24425 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 takes 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, through its modern, fuel-efficient fleet of mid-size tankers, seaborne transportation of petroleum products and chemicals worldwide to oil majors, national oil companies, oil and chemical traders, and chemical companies.
Ardmore’s core strategy is to continue to develop a modern, high-quality fleet of product and chemical tankers, build key long-term commercial relationships and maintain its cost advantage in assets, operations and overhead, while creating synergies and economies of scale as the company grows. Ardmore provides its services to customers through voyage charters and time charters, and enjoys close working relationships with key commercial and technical management partners.
Ardmore’s Energy Transition Plan (“ETP”) focusses on three key areas: transition technologies, transition projects, and sustainable (non-fossil fuel) cargos. The ETP is an extension of Ardmore’s strategy, building on its core strengths of tanker chartering, shipping operations, technical and operational fuel efficiency improvements, technical management, construction supervision, project management, investment analysis, and ship finance.
Ardmore Shipping Corporation
Unaudited Condensed Consolidated Balance Sheets
As of
In thousands of U.S. Dollars, except as indicated
December 31, 2023
December 31, 2022
ASSETS
Current assets
Cash and cash equivalents
46,805
50,569
Receivables, net of allowance for bad debts of $1.5 million (2022: $2.2 million)
56,234
79,843
Prepaid expenses and other assets
4,348
4,521
Advances and deposits
6,833
2,160
Inventories
12,558
15,718
Current portion of derivative assets
—
4,927
Total current assets
126,778
157,738
Non-current assets
Investments and other assets, net
11,186
11,219
Vessels and vessel equipment, net
524,044
531,378
Deferred drydock expenditures, net
12,022
4,716
Advances for ballast water treatment and scrubber systems
9,587
5,530
Deferred finance fees, net
2,835
2,717
Operating lease, right-of-use asset
4,499
10,561
Total non-current assets
564,173
566,121
TOTAL ASSETS
690,951
723,859
LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY
Current liabilities
Accounts payable
2,016
8,814
Accrued expenses and other liabilities
18,265
20,890
Deferred revenue
347
1,220
Accrued interest on debt and finance leases
939
863
Current portion of long-term debt
6,436
12,927
Current portion of finance lease obligations
2,029
1,857
Current portion of operating lease obligations
3,807
6,358
Total current liabilities
33,839
52,929
Non-current liabilities
Non-current portion of long-term debt
39,590
115,869
Non-current portion of finance lease obligations
41,614
43,643
Non-current portion of operating lease obligations
510
3,969
Other non-current liabilities
954
1,007
Total non-current liabilities
82,668
164,488
TOTAL LIABILITIES
116,507
217,417
Redeemable Preferred Stock
Cumulative Series A 8.5% redeemable preferred stock
37,043
37,043
Total redeemable preferred stock
37,043
37,043
Stockholders’ equity
Common stock
433
426
Additional paid in capital
471,216
468,006
Accumulated other comprehensive income
—
1,468
Treasury stock
(15,636)
(15,636)
Retained earnings
81,388
15,135
Total stockholders’ equity
537,401
469,399
Total redeemable preferred stock and stockholders’ equity
574,444
506,442
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY
690,951
723,859
Ardmore Shipping Corporation
Unaudited Condensed Consolidated Statements of Operations
Three Months Ended
Year Ended
In thousands of U.S. Dollars except per share and share data
December 31, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Revenue, net
98,878
132,831
395,978
445,741
Voyage expenses
(33,169)
(39,506)
(131,904)
(153,729)
Vessel operating expenses
(15,149)
(14,174)
(59,770)
(60,020)
Time charter-in
Operating expense component
(2,964)
(3,145)
(10,194)
(7,809)
Vessel lease expense component
(2,728)
(2,894)
(9,380)
(7,185)
Depreciation
(7,134)
(7,250)
(27,817)
(29,276)
Amortization of deferred drydock expenditures
(908)
(1,000)
(3,542)
(4,161)
General and administrative expenses
Corporate
(5,663)
(5,347)
(20,565)
(19,936)
Commercial and chartering
(1,366)
(1,308)
(4,676)
(4,171)
Unrealized (losses) / gains on derivatives
(231)
(1,303)
(262)
2,961
Interest expense and finance costs
(2,722)
(2,035)
(11,408)
(15,537)
Loss on extinguishment
—
(888)
—
(1,576)
Interest income
555
251
1,818
471
Loss on vessels sold
—
—
—
(6,917)
Income before taxes
27,399
54,232
118,278
138,856
Income tax
(88)
(136)
(435)
(207)
Loss from equity method investments
(305)
(159)
(1,035)
(195)
Net Income
27,006
53,937
116,808
138,454
Preferred dividend
(857)
(857)
(3,400)
(3,400)
Net Income attributable to common stockholders
26,149
53,080
113,408
135,054